2017-07-01

Lois sur la protection de l'emploi et séparations

Franck Malherbet, Pierre Cahuc, Julien Prat

Standard economic models predict that employment protection legislations reduce job destruction and job creation, hence suggesting that they have an ambiguous effect on unemployment.   The negative impact on job creation arises from the anticipation of separation costs, which reduce expected profits. Although this mechanism is clear in theory, it has very little empirical support.    In this project, we show that the anticipation effect does play a key role in reducing job creation, but also in increasing job destruction, thus inducing significant employment losses. To establish this finding, we use a discontinuity in the relation between seniority and severance payments in case of unfair dismissal. Until September 2017, French employers had to pay at least six months' salary to their employees whose seniority exceeded two years in case of unfair dismissal. We show, relying on data, that this regulation entails a hike in severance payments which induces a noticeable rise in the job separation rate just before the two-year threshold, followed by a drop of even greater magnitude. We devise a search and matching model which accurately reproduces the shape of the separation rate, and use the discontinuity at two years to identify its structural parameters.

The preliminary estimations of the structural model relying with GMM suggest that the procedural costs are large and that employment protection decreases the average duration of employment. However, it should be noted that the complexity of the model renders the numerical procedures to estimate the model computationally intensive. The complete estimation of the model and the associated robustness checks will require an approach that is even more intensive and complex. We are actually facing difficulties to complete this last part of our project due to limitations in computing power. High performance computing facilities is the key to successfully complete this project, and that is the reason why we ask funding for a High-Performance-Computing (HPC) server. Technically speaking, it consists in adding to the existing clusters at ENSAE-Ecole Polytechnique, a new and dedicated scalable computing and storage dual-socket platform for high computing performance. This procedure is common to research projects that cannot be ran using standard computing facilities and require dedicated resource. It has been for instance successfully implemented for projects in Trade (Isabelle Méjean) and Labor economics (Bruno Crépon). It should also be noted that software and maintenance costs are entirely borne by the IT-service at ENSAE-Ecole Polytechnique, and thus do not require any supplementary financing.


Responsables du projet :

Franck Malherbet, CREST-ENSAE

Pierre Cahuc, Sciences Po, IZA, CEPR

Julien Prat, CREST


Ce projet est financé par la chaire Sécurisation des Parcours Professionnels.