The perverse effects of partial labour market reform: Fixed-term contracts in France

We argue that the effects of a partial reform of employment protection by allowing firms to hire workers oil fixed-term contracts may be perverse. The main effect may be high turnover ill entry-level jobs. leading to higher, not lower, unemployment. Even if unemployment falls, workers may be worse off, going through many spells of unemployment and entry-level jobs, before obtaining a regular job. Considering French data for young workers since the early 1980s, we conclude that the reforms have substantially, increased turnover, without a substantial reduction in unemployment duration. If anything, the effect oil their welfare appears to have been negative.