Employment Protection and Temporary Work Agencies
52 Pages Posted: 8 Jun 2016
Date Written: 2008
Employers who use temporary agency staff in contrast to regular staff are not affected by employment protection regulations when terminating a job. Therefore, services provided by temporary work agencies may be seen as a substitute for regular employment. In this paper, we analyze the effects of employment protection on the size of the temporary work agency sector in a model of equilibrium unemployment. We find that higher firing costs may even reduce temporary work agency employment if agencies themselves are subject to employment protection, a consideration which distinguishes our results from those for fixed-term employment arrangements.
Keywords: employment protection, temporary work agencies, search and matching models, unemployment
JEL Classification: J68, J65, J64, J30
Suggested Citation: Suggested Citation