Escaping social pressure: Fixed-term contracts in multi-establishment firms

Andrea Bassanini, Eve Caroli, Francois Fontaine and Antoine Rebérioux

Journal of Economic Behavior & Organization, 2021, vol. 188, issue C, 697-715

Abstract: We develop a simple theoretical model showing that, by adding to the adjustment costs associated with permanent contracts, local social pressure against dismissals creates an incentive for CEOs to rely on fixed-term contracts, in an attempt to escape social pressure. Using linked employer-employee data, we show that establishments located closer to headquarters have higher shares of fixed-term contracts in hiring than those located further away whenever firms' headquarters are located in self-centered communities and the CEO not only works but also lives there. We show that these findings can only be explained by local social pressure.

Keywords: Social pressure; Employment contracts; Adjustment costs; CEO reputation (search for similar items in EconPapers)
JEL-codes: J23 J41 M14 M55 R12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Escaping social pressure: Fixed-term contracts in multi-establishment firms (2021)
Working Paper: Escaping social pressure: Fixed-term contracts in multi-establishment firms (2021)
Working Paper: Escaping Social Pressure: Fixed-Term Contracts in Multi-Establishment Firms (2021)
Working Paper: Escaping Social Pressure: Fixed-Term Contracts in Multi-Establishment Firms (2021)
Working Paper: Escaping Social Pressure: Fixed-Term Contracts in Multi-Establishment Firms (2021)
Working Paper: Escaping Social Pressure: Fixed-Term Contracts in Multi-Establishment Firms (2019)
Working Paper: Escaping Social Pressure: Fixed-Term Contracts in Multi-Establishment Firms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:188:y:2021:i:c:p:697-715

DOI: 10.1016/j.jebo.2021.05.027

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