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Title:Stability versus flexibility: The role of temporary employment in labour adjustment PDF Logo
Authors:Cao, Shutao
Leung, Danny
Issue Date:2010
Series/Report no.:Bank of Canada Working Paper 2010,27
Abstract:In Canada, temporary workers account for 14 per cent of jobs in the non-farm business sector, are present in a range of industries, and account for 40 per cent of the total job reallocation. Yet most models of job reallocation abstract from temporary workers. This paper evaluates the importance of temporary workers in job reallocation in a multi-sector model with costly labour adjustment and temporary workers. The calibrated model captures some features of job reallocation in Canada. The paper shows that the adjustment cost parameters for permanent workers are underestimated if temporary workers are ignored. It also shows that when a shock occurs where permanent workers bear the brunt of reallocation (e.g. the 2005-2008 commodity price boom and the appreciation of the Canadian dollar), aggregate adjustment costs are underestimated if temporary workers are not accounted for.
Subjects:Labour markets
Productivity
JEL:D24
J32
Document Type:Working Paper
Appears in Collections:Bank of Canada Working Papers

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