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The perverse effects of partial employment protection reform : experience rating and french old workers

Author

Listed:
  • Luc Behaghel
  • Bruno Crépon
  • Béatrice Sédillot
Abstract
French firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system, known as the Delalande tax. This is a rare case of experience rating in the European context. We evaluate its impact on layoffs as well as on hiring, taking advantage of several changes in the measure since its introduction in 1987. A legislative change in 1992 exempted firms from the tax for workers who were hired after age 50. Following this change, the transition rate from unemployment to employment increased significantly for workers over 50 compared to workers less than 50. The difference is sizeable: between one third and one half of the initial transition rate. Evidence on the effect on layoffs is less clear cut. The impact is sizeable only for the most stringent tax schedule, after 1998.

Suggested Citation

  • Luc Behaghel & Bruno Crépon & Béatrice Sédillot, 2006. "The perverse effects of partial employment protection reform : experience rating and french old workers," Research Unit Working Papers 0608, Laboratoire d'Economie Appliquee, INRA.
    • Handle: RePEc:lea:leawpi:0608
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    More about this item

    Keywords

    Experience rating; employment protection; old workers; layoff; hiring;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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