@article{Fixed-Term:2498,
      recid = {2498},
      author = {Cao, Shutao and Shao, Enchuan and Silos, Pedro},
      title = {Fixed-Term and Permanent Employment Contracts: Theory and  Evidence},
      address = {2011},
      pages = {1 online resource (iii, 55 pages)},
      abstract = {This paper constructs a theory of the coexistence of  fixed-term and permanent employment contracts in an  environment with ex-ante identical workers and employers.   Workers under fixed-term contracts can be dismissed at no  cost while permanent employees enjoy labor protection. In a  labor market characterized by search and matching  frictions, firms find it optimal to discriminate by  offering some workers a fixedterm contract while offering  other workers a permanent contract. Match-specific quality  between a worker and a firm determines the type of contract  offered. We analytically characterize the firm’s hiring and  firing rules. Using matched employer-employee data from  Canada, we estimate the model’s parameters. Increasing the  level of firing costs increases wage inequality and  decreases the unemployment rate. The increase in inequality  results from a larger fraction of temporary workers and not  from an increase in the wage premium earned by permanent  workers.},
      url = {http://www.oar-rao.bank-banque-canada.ca/record/2498},
      doi = {https://doi.org/10.34989/swp-2011-21},
}