16 mai 2014, 10h00–11h15
Toulouse
Salle MS 003
Public Economics Workshop
Résumé
This article analyzes experimentally three different types of labor contracts. The two first types of labor contracts are the standard period-by-period contract and the permanent one. We propose a new type of contract (automatic renewal) in which workers are re-hired if they satisfied the effort level required by the firm. Another novel aspect of our experimental design is that workers have the chance of investing money in a long-term project in order to increase their profits. We find two main results: i) the dismissal barriers in the labor contracts seem to provide a safer institutional setting to undertake long-term projects more successfully; and ii) those workers engaged in a long-term project provided higher effort levels. In sum, we find a strong relationship between what happens inside the labor market (worker’s performance) and what happens outside the labor market (long-term projects).