Paolini, Dimitri and Tena, Juan de Dios ORCID: 0000-0001-8281-2886
(2012)
Short or long-term contract? Firm’s optimal choice.
Empirica, 39 (1).
pp. 1-18.
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Abstract
This article studies the behaviour of a firm searching to fill a vacancy. The main assumption is that the firm can offer two different kinds of contracts to the workers, either a short-term contract or a long-term one. The short-term contract acts as a probationary stage in which the firm can learn about the worker. After this stage, the firm can propose a long-term contract to the worker or it can decide to look for another worker. We show that, if the short-term wage is fixed endogenously, it can be optimal for firms to start a working relationship with a short-term contract, but that this policy decreases unemployment and welfare. On the contrary, if the wage is fixed exogenously, this policy could be optimal also from a welfare point of view. © 2011 Springer Science+Business Media, LLC.
Item Type: | Article |
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Depositing User: | Symplectic Admin |
Date Deposited: | 22 Sep 2015 09:56 |
Last Modified: | 17 Dec 2022 01:34 |
DOI: | 10.1007/s10663-010-9152-1 |
Related URLs: | |
URI: | https://livrepository.liverpool.ac.uk/id/eprint/2026741 |