Institute for Research on Labor and Employment
The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers
- Author(s): Munoz, Pablo
- Micco, Alejandro
- et al.
Published Web Locationhttps://irle.berkeley.edu/the-impact-of-extended-employment-protection-laws-on-the-demand-for-temporary-agency-workers/
We study the impact of a reform that increased the regulatory burden on temporary agency work (TAW) in Chile. Using a panel of manufacturing plants, we show that the use of TAW fell immediately after the regulation, with differential effects by plants’ size and volatility. Difference-in-differences estimates suggest that plants using TAW substituted away from agency workers after the regulation, increasing regular work by 9.2%. Despite this substitution effect, total employment decreased by 8.6% in these plants. We report less precise evidence of negative scale effects on output and profits.