Fixed-term contracts and the dynamics of labour demand

We estimate a model of labour demand that accounts for dynamics arising fro m the relative costs of hiring and firing workers on either indefinite-term contract (ITC) or fixed-term contract (FTC). We use a panel of 1000 French firms, for which we can measure the number of entries and exits for each t ype of contract between 1988 and 1992, Our estimates suggest that (1) it is much more costly to lay off workers under ITC than to hire them; (2) it is much less costly to adjust the number of FTC than to adjust the number of ITC; (3) the asymmetry between hiring and lay off costs is more important f or non-production than for production workers. (C) 2001 Elsevier Science B. V. All rights reserved, JEL classification: J23; J30; D21.