The Effects of Employment Insecurity on Demand, Productivity and Employment Levels

Abstract

This paper investigates the effects of labour market deregulation on demand, productivity and employment levels in the short term. The focus will be on deregulation of labour contracts, i.e. on the transition from a legal system that guarantees permanent employment to a system of formal rules allowing for job insecurity. The idea is that the greater the deregulation of labour contracts, the higher the productivity and the lower the demand and employment levels.