Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107495
Authors: 
Centeno, Mario
Novo, Alvaro A.
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8702
Abstract: 
In a segmented labor market, theory predicts that employment protection has an asymmetric impact on entry and incumbent wages. We explore a reform that increased the protection of open-ended contracts for a well-defined subset of firms, while leaving it unchanged for other firms. The causal evidence points to a reduction in wages for new open-ended and fixed-term contracts and no impact for more tenured workers. The reductions estimated for entrants oscillate between -0.9 and -0.5 p.p., covering a significant part of the expected increase in firing costs. Firms with larger shares of fixed-term contracts shifted the burden to these workers.
Subjects: 
wages
two-tier systems
quasi-experiment
employment protection
JEL: 
J31
J32
J63
Document Type: 
Working Paper

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