 The Effect of EPL on the Conversion Rate of Temporary Contracts into Permanent contractsGiornale degli Economisti, 2009, vol. 68, issue 2, 211-231 Abstract: This paper analyzes the effect of Employment Protection Legislation (EPL) on the conversion rate of temporary contracts into permanent ones in the same firm. Once EPL is enforced, two effects might arise: employers could tend to replace their permanent workforce with short-term employment because of the lower expected value of a filled job, but firms might also prefer to stabilize part of their temporary workforce both to reduce the uncertainty of costly job-breakups and to increase the matching surplus. Which of these two effects is dominant is ultimately an empirical question, and we exploit a natural experiment yielded by the Italian 1990 reform which introduced unjust dismissal costs for small businesses to identify the effect of EPL on the conversion rate of working and training contracts (Contratti di formazione e lavoro - CFL) into permanent ones in the same firm. We find that more stringent EPL acts positively on the conversion rates, and that the estimates remain similar for different robustness checks. Keywords: Dismissal Costs; Temporary Contracts; Difference-in-Differences (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:gde:journl:gde_v68_n2_p211-231 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Giornale degli Economisti from GDE (Giornale degli Economisti e Annali di Economia), Bocconi University via Sarfatti, 25 - 20136 Milano (Italy). |
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