American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
The Life Cycle Implications of Temporary Employment Contracts
American Economic Journal: Macroeconomics
(pp. 200–235)
Abstract
Employment protections often create two-tiered labor markets with substantial differences in job security. I estimate the effects of removing these protections using a quantitative life cycle model, where younger workers are more likely to select into precarious jobs. Workers accumulate human capital when employed and face the possibility of human capital losses in unemployment. Because workers with greater job security experience fewer unemployment spells, they tend to accumulate more human capital over their careers. I show that reducing employment protections boosts younger workers' job-finding rates but lowers human capital, GDP, and employment. Impacts of these policies differ significantly by age.Citation
Kaiser, Rosemary. 2026. "The Life Cycle Implications of Temporary Employment Contracts." American Economic Journal: Macroeconomics 18 (3): 200–235. DOI: 10.1257/mac.20230376Additional Materials
JEL Classification
- D15 Intertemporal Household Choice; Life Cycle Models and Saving
- E23 Macroeconomics: Production
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J22 Time Allocation and Labor Supply
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J41 Labor Contracts
- J42 Monopsony; Segmented Labor Markets