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Financial incentives and labor market duality

Clémence Berson () and N. Ferrari

Working papers from Banque de France

Abstract: In coordination with the ECB and 24 other national central banks of the European Union, the Banque de France interrogated 1150 French firms to understand how the crisis affected their economic environment and their human resources practices during the 2010-2013 period. A majority of workers were employed by firms which indicate that their activity was mostly affected by a decrease in demand considered as long-lasting by more than 40% of them, especially in the construction sector and among small firms. In contrast, less than 20% of firms (weighted by their employment) report that the unavailability of credit had an effect on their activity. Over the period, despite the economic downturn, the amount of total costs increased for 70% of firms (weighted by their employment) mainly through an increase in labour costs and secondly in the cost of supplies. In particular, base wages continued to increase for a large share of firms, suggesting strong downward wage rigidities. Many firms indicate substantial difficulties in adjusting the labour force: throughout the crisis it became more difficult to hire qualified employees, to adjust working hours or to move workers to different job positions. The joint presence of difficulties in finding employees and unemployment growth suggest that structural unemployment increased in France in recent years. Other factors considered as significantly constraining for employment growth by a large majority of firms are uncertainty about economic conditions, risks that labour laws are changed, high payroll taxes and firing costs.

Keywords: Duality; public policies. (search for similar items in EconPapers)
JEL-codes: J41 J42 J48 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2015
New Economics Papers: this item is included in nep-eec, nep-iue and nep-lma
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Journal Article: Financial incentives and labour market duality (2015) Downloads
Working Paper: Financial incentives and labor market duality (2014) Downloads
Working Paper: Financial incentives and labor market duality (2014) Downloads
Working Paper: Financial incentives and labor market duality (2014) Downloads
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