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The French first employment contract: efficient screening device or Kleenex contract

Baç, Mehmet and Genç, Şerife (2009) The French first employment contract: efficient screening device or Kleenex contract. Journal of Economics, 98 (1). pp. 77-88. ISSN 0931-8658 (Print) 1617-7134 (Online)

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Official URL: http://dx.doi.org/10.1007/s00712-009-0080-0

Abstract

The controversial novelty in the French Labor Law reform, withdrawn in April 2006, was a contract form under which employers could dismiss young workers on probation without justification. Proponents argued that the reform would improve screening and boost employment whereas opponents dubbed it the "Kleenex contract." We show that the new contract can produce an incentive to dismiss even suitable workers but that this harmful effect could be mitigated by instituting public ratings of firms according to their propensity to dismiss young workers. Informed workers could then respond to job offers according to firms' layoff records, which in turn would restore promotion incentives and efficient screening.

Item Type:Article
Uncontrolled Keywords:French labor law reform; Contracts; Efficient screening
Subjects:H Social Sciences > HD Industries. Land use. Labor
ID Code:13463
Deposited By:Mehmet Baç
Deposited On:08 Dec 2009 16:38
Last Modified:25 May 2011 14:19

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