This paper analyzes how changes in the firing-costs gap between permanent and temporary workers affect firms' TFP in a dual labour market. We argue that, under plausible conditions, firms' temp-to-perm conversion rates go down when this gap increases. Temporary workers respond to lower...

This paper analyzes how changes in the firing-costs gap between permanent and temporary workers affect firms’ TFP in a dual labour market. We argue that, under plausible conditions, firms’ temp-to-perm conversion rates go down when this gap increases. Temporary workers respond to lower...

This paper analyzes the effect of having a large gap in firing costs between permanent and temporary workers in a dual labour market on TFP development at the firm level. We propose a simple model showing that, under plausible conditions, both temporary workers' effort and firms' temp-to-perm...