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Dual Labor Markets and Labor Protection in an Estimated Search and Matching Model

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  • Mauricio M. Tejada

    (ILADES - Universidad Alberto Hurtado)

Abstract

Temporary contracts, as well as labor protection, have been used to reduce unemployment with the latter leading to fewer job destructions. This paper estimates a search and matching model with labor protection and dual labor markets in which the use of temporary contracts is endogenous. Chilean data is used to evaluate the role of labor protection legislation and the use of temporary contracts in unemployment, welfare, and inequality. Results indicate that both types of contracts survive in equilibrium. Temporary contracts negatively affect the frequency with which regular jobs arrive, offsetting any positive effect of firing costs on unemployment. Temporary contracts increase flexibility but welfare gains are observed only if labor protection is very stringent.

Suggested Citation

  • Mauricio M. Tejada, 2014. "Dual Labor Markets and Labor Protection in an Estimated Search and Matching Model," ILADES-UAH Working Papers inv295, Universidad Alberto Hurtado/School of Economics and Business.
    • Handle: RePEc:ila:ilades:inv295
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Normann Rion, 2019. "Waiting for the Prince Charming: Fixed-Term Contracts as Stopgaps," Working Papers halshs-02331887, HAL.
    2. Matteo Picchio & Mattia Filomena, 2021. "Are Temporary Jobs Stepping Stones Or Dead Ends? A Meta-Analytical Review Of The Literature," Working Papers 455, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    3. Bustelo, Monserrat & Flabbi, Luca & Piras, Claudia & Tejada, Mauricio, 2019. "Female Labor Force Participation, Labor Market Dynamic and Growth in LAC," IDB Publications (Working Papers) 9420, Inter-American Development Bank.
    4. Iva Tomic, 2020. "Employment protection reforms and labour market outcomes in the aftermath of the recession: Evidence from Croatia," Public Sector Economics, Institute of Public Finance, vol. 44(1), pages 3-39.
    5. Mauricio Tejada & Claudia Piras & Luca Flabbi & Monserrat Bustelo, 2021. "Gender Gaps in Latin American Labor Markets: Implications from an Estimated Search Model," Annals of Economics and Statistics, GENES, issue 142, pages 111-178.
    6. repec:hal:spmain:info:hdl:2441/2oi450ns2095rq83rilpo67bhb is not listed on IDEAS
    7. Makoto Masui, 2020. "The determinants of employers’ use of temporary contracts in the frictional labor market," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 803-834, November.
    8. Lucas Navarro & Mauricio Tejada, 2022. "Does Public Sector Employment Buffer the Minimum Wage Effects?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 168-196, January.
    9. repec:spo:wpmain:info:hdl:2441/2oi450ns2095rq83rilpo67bhb is not listed on IDEAS
    10. Bruno Coquet & Eric Heyer, 2018. "Pour une régulation économique des contrats courts sans contraindre les entreprises, en préservant l'assurance," SciencePo Working papers Main hal-03404222, HAL.

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    More about this item

    Keywords

    Temporary Jobs; Labor Protection; Search Models; Maximum Likelihood Estimation; Structural Estimation.;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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