The Effects of Employment Insecurity on Demand, Productivity and Employment Levels

This paper investigates the effects of labour market deregulation on demand,productivity and employment levels in the short term. The focus will be on deregulation of labour contracts, i.e. on the transition from a legal system that guarantees permanentemployment to a system of formal rules allowing for job insecurity. The idea is that thegreater the deregulation of labour contracts, the higher the productivity and the lowerthe demand and employment levels.