Summary Employment protection affects labour market outcomes and hence the incentive to acquire skills. Using a matching model with two education levels in which workers decide ex-ante on their skill formation, it is shown that employment protection can raise the fraction of skilled workers....

Employers who use temporary agency staff in contrast to regular staff are not affected by employment protection regulations when terminating a job. Therefore, services provided by temporary work agencies may be seen as a substitute for regular employment. In this paper, we analyze the effects of...