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on Contract Theory and Applications |
| By: | Giuseppe Grasso; Konstantinos Tatsiramos |
| Abstract: | This paper examines the impact of increasing the relative cost of fixed-term contracts on labor demand as well as the demand for standard measures of human capital and specific skill requirements. We evaluate a 2018 Italian labor law reform that raised the cost of fixed-term contracts while keeping permanent contract costs unchanged. We employ a difference- indifferences research design, leveraging the variation in firms’ exposure to the reform resulting from their diverse reliance on fixed-term contracts due to differing reactions to earlier labor market reforms. Using rich data covering the near universe of online job vacancies in Italy, our findings indicate that the increase in hiring costs for temporary contracts led to a decrease in the relative demand for temporary workers and an increase in the demand for permanent workers. This shift in demand was accompanied by upskilling towards workers with higher levels of human capital and specific skill requirements. When offering jobs under permanent contracts, firms increased their demand for workers with a college degree and social skills. At the same time, they reduced their demand for workers with only a high school degree and no work experience. On the other hand, when offering jobs under fixed-term contracts, firms increased their demand for workers with some work experience and social skills. These findings suggest that while restricting fixed-term contracts encouraged the hiring of permanent workers, such reforms might have unintended consequences by raising the hiring standards for job entry, thereby reducing employment opportunities for less qualified workers. |
| Keywords: | hiring costs, employment protection, dual labor markets, skills |
| JEL: | J23 J24 J63 K31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10693&r=cta |
| By: | Junichiro Ishida; Wing Suen |
| Abstract: | We introduce behavioral diversity to an otherwise standard signaling model, in which a fraction of agents choose their signaling actions according to an exogenous distribution. These behavioral agents provide opportunities for strategic low-type agents to successfully emulate higher types in equilibrium, which in turn reduces the cost for strategic high-type agents to separate from lower types. Behavioral diversity thus improves the equilibrium payoffs to all types of strategic agents. The model also exhibits a convergence property which is intuitively more appealing than the least-cost separating equilibrium of the standard setting. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1216&r=cta |
| By: | Qianjun Lyu; Wing Suen |
| Abstract: | An uninformed sender publicly commits to an informative experiment about an uncertain state, privately observes its outcome, and sends a cheap-talk message to a receiver. We provide an algorithm valid for arbitrary state-dependent preferences that will determine the sender’s optimal experiment and his equilibrium payoff under binary state space. We give sufficient conditions for information design to be valuable or not under different payoff structures. These conditions depend more on marginal incentives - how payoffs vary with the state - than on the alignment of sender’s and receiver’s rankings over actions within a state. The algorithm can be easily modified to study canonical cheap talk games with a perfectly informed sender. |
| Keywords: | marginal incentives, common interest, concave envelope, quasiconcave envelope, double randomization |
| JEL: | D82 D83 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_470&r=cta |