A model of risk sharing in a dual labor market

• 成果类型: Article
• 署名作者: Crechet, Jonathan
• 署名单位: University of Ottawa
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2024.103591
• 发表日期: 2024
• 关键词: Search frictions; dynamic contracts; limited commitment; Employment protection legislation

摘要

In OECD countries, the labor market features a coexistence of open-ended, permanent jobs subject to strict employment protection and fixed-term, temporary jobs. This paper studies a search-and-matching model with risk-averse workers and dynamic employment contracts subject to limited commitment. In equilibrium, permanent and temporary jobs coexist when the match quality is sufficiently dispersed: firing costs generate insurance gains implying that permanent contracts are optimal for high-quality matches. Consistent with recent empirical evidence, quantitative analysis of the model shows that temporary contracts crowd out permanent jobs and do not generate employment gains.