American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
The Impact of Extending Employment Protection to Agency Workers on Firms
American Economic Journal: Macroeconomics
(pp. 66–101)
Abstract
We study the impact of a reform that extended employment protection to temporary agency workers. Using a difference-in-difference research design, we show that plants more exposed to the regulation experienced a decrease in revenues and total employment, and that the latter effect was attenuated in industries with high elasticity of substitution between agency and nonagency workers. We also find that labor misallocation increased as a consequence of the regulation. A model of labor demand in the presence of agency work rationalizes these results.Citation
Micco, Alejandro, and Pablo Muñoz. 2024. "The Impact of Extending Employment Protection to Agency Workers on Firms." American Economic Journal: Macroeconomics 16 (1): 66–101. DOI: 10.1257/mac.20210249Additional Materials
JEL Classification
- J22 Time Allocation and Labor Supply
- J23 Labor Demand
- J31 Wage Level and Structure; Wage Differentials
- K31 Labor Law
- L60 Industry Studies: Manufacturing: General
- M51 Personnel Economics: Firm Employment Decisions; Promotions
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration