Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232781 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14029
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We develop a simple theoretical model showing that, by adding to the adjustment costs associated with permanent contracts, local social pressure against dismissals creates an incentive for CEOs to rely on fixed-term contracts, in an attempt to escape social pressure. Using linked employer-employee data, we show that establishments located closer to headquarters have higher shares of fixed-term contracts in hiring than those located further away whenever firms' headquarters are located in self-centered communities and the CEO not only works but also lives there. We show that these findings can only be explained by local social pressure.
Subjects: 
social pressure
employment contracts
adjustment costs
CEO reputation
JEL: 
J23
J41
M14
M55
R12
Document Type: 
Working Paper

Files in This Item:
File
Size
1.93 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.