An Anatomy of the French Labour Market

[Excerpt] Over the last decades, many European countries have experienced high and persistent unemployment rates. The bulk of labour market research has tackled this issue by emphasizing the effect of employment protection legislation, hereafter EPL, on labour market performance. As a result, the importance of labour market flexibility has been widely acknowledged. This view can be summarized by the expressed desire of the E.U. council to give member States incentives to “review and, where appropriate, reform overly restrictive elements in employment legislation that affect labour market dynamics [...] and to undertake other appropriate measures to promote a better balance between work and private life and between flexibility and security”. It is however striking that most of the reforms undertaken have contrasted sharply with this latter recommendation by favouring reforms at the margin. Those reforms have fostered two-tier systems, as the increase in labour market flexibility has taken place mainly through a series of marginal reforms that liberalized the use of fixed-term and/or non-standard employment contracts. Two-tier systems have promoted the emergence of dual employment protection which can be broadly defined as the coexistence of both long-term contracts, which benefit from stringent protection, and short-term contracts with little or no protection. It is often argued that this combination creates labour market segmentation, traps workers in a recurring sequence of frequent unemployment spells, favours unequal repartition of risk between workers and enhances inequalities. In particular, two-tier systems create excess labour turnover as they increase the incentives to create temporary rather than permanent jobs, reduce job destruction for stable jobs, but increase churning for temporary jobs. For instance in countries with stringent legal constraints on the termination of permanent jobs, such as France or Spain, it turns out that about 70 per cent to 90 per cent of entries into employment are in temporary jobs with very short duration (on average less than one month and a half in France). If excess labour turnover and its consequences are a concern for the economy as a whole, the dramatic spread of temporary jobs is even more a concern for young/less experienced workers as they are more likely to be negatively affected by the adverse effects of dual employment protection. The French labour market is no exception and has faced similar trends during the 1990s. Given the pervasiveness of temporary jobs on the labour market and their consequences on the society and economic outcomes, it is urgent to understand how two-tier systems shape the functioning of the labour market. This is the very purpose of the present report. After having described in details the salient features of the French dual labour market and having discussed the legislation at the root of French dualism, we review the different mechanisms through which dualism affect labour markets: labour market dynamics, wage inequality, human capital accumulation, job satisfaction, social integration and health. We consider whenever possible both theoretical insights and empirical evaluations. We finally conclude this report by providing possible directions to reform the labour market

Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model

We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the noncounseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.evaluation, equilibrium effect, labor market policy

Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model

We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the non-counseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.evaluation, equilibrium effect, labor market policy

Which jobs are done from home? Evidence from the American Time Use Survey?

Which jobs are more likely to be affected by mobility restrictions due to the Covid-19 pandemic? This paper uses American Time Use Survey data to measure the share of the work hours that are spent at home for different job categories. We compute and provide home-working shares by occupation (US census classification, SOC and international ISCO classification), and by industry (US census classification, NAICS and international ISIC classification)

Sample Attrition Bias in Randomized Experiments: A Tale of Two Surveys

The randomized trial literature has helped to renew the fields of microeconometric policy evaluation by emphasizing identification issues raised by endogenous program participation. Measurement and attrition issues have perhaps received less attention. This paper analyzes the dramatic impact of sample attrition in a large job search experiment. We take advantage of two independent surveys on the same initial sample of 8, 000 persons. The first one is a long telephone survey that had a strikingly low and unbalanced response rate of about 50%. The second one is a combination of administrative data and a short telephone survey targeted at those leaving the unemployment registers; this enriched data source has a balanced and much higher response rate (about 80%). With naive estimates that neglect non responses, these two sources yield puzzlingly different results. Using the enriched administrative data as benchmark, we find evidence that estimates from the long telephone survey lack external and internal validity. We turn to existing methods to bound the effects in the presence of sample selection; we extend them to the context of randomization with imperfect compliance. The bounds obtained from the two surveys are compatible but those from the long telephone survey are somewhat uninformative. We conclude on the consequences for data collection strategies.randomized evaluation, survey non response, bounds

Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model

We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the noncounseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment

Unintended Effects of Anonymous Resumes

We evaluate an experimental program in which the French public employment service anonymized resumes for firms that were hiring. Firms were free to participate or not; participating firms were then randomly assigned to receive either anonymous resumes or name-bearing ones. We find that participating firms become less likely to interview and hire minority candidates when receiving anonymous resumes. We show how these unexpected results can be explained by the self-selection of firms into the program and by the fact that anonymization prevents the attenuation of negative signals when the candidate belongs to a minority

Sample attrition bias in randomized experiments: A tale of two surveys

The randomized trial literature has helped to renew the field of microeconometric policy evaluation by emphasizing identification issues raised by endogenous program participation. Measurement and attrition issues have perhaps received less attention. This paper analyzes the dramatic impact of sample attrition in a large job search experiment. We take advantage of two independent surveys on the same initial sample of 8,000 persons. The first one is a long telephone survey that had a strikingly low and unbalanced response rate of about 50%. The second one is a combination of administrative data and a short telephone survey targeted at those leaving the unemployment registers; this enriched data source has a balanced and much higher response rate (about 80%). With naive estimates that neglect non responses, these two sources yield puzzlingly different results. Using the enriched administrative data as benchmark, we find evidence that estimates from the long telephone survey lack external and internal validity. We turn to existing methods to bound the effects in the presence of sample selection; we extend them to the context of randomization with imperfect compliance. The bounds obtained from the two surveys are compatible but those from the long telephone survey are somewhat uninformative. We conclude on the consequences for data collection strategies.unemployment ; job search ; counselling ; attrition ; sample selection

Unemployment insurance and reservation wages : evidence from administrative data

Although the reservation wage plays a central role in job search models, empirical evidence on the determinants of reservation wages, including key policy variables such as unemployment insurance (UI), is scarce. In France, unemployed people must declare their reservation wage to the Public Employment Service when they register to claim UI benefits. We take advantage of these rich French administrative data and of a reform of UI rules to estimate the effect of the Potential Benefit Duration (PBD) on reservation wages and on other dimensions of job selectivity, using a difference-in-difference strategy. We cannot reject that the elasticity of the reservation wage with respect to PBD is zero. Our results are precise and we can rule out elasticities larger than 0.006. Furthermore, we do not find any significant effects of PBD on the desired number of hours, duration of labor contract and commuting time/distance. The estimated elasticity of actual benefit duration with respect to PBD of 0.3 is in line with the consensus in the literature. Exploiting a Regression Discontinuity Design as an alternative identification strategy, we find similar results