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The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers

Pablo Munoz and Alejandro Micco

Institute for Research on Labor and Employment, Working Paper Series from Institute of Industrial Relations, UC Berkeley

Abstract: We study the impact of a reform that increased the regulatory burden on temporary agency work (TAW) in Chile. Using a panel of manufacturing plants, we show that the use of TAW fell immediately after the regulation, with differential effects by plants’ size and volatility. Difference-in-differences estimates suggest that plants using TAW substituted away from agency workers after the regulation, increasing regular work by 9.2%. Despite this substitution effect, total employment decreased by 8.6% in these plants. We report less precise evidence of negative scale effects on output and profits.

Keywords: Law; Social and Behavioral Sciences; Global Labor; Labor Markets; Public Policy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2019-09-01
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