Marcelo Veracierto

Federal Reserve Bank of Chicago
Research Department
230 South LaSalle Street
Chicago, Illinois 60604
Tel: (312) 322-5695
Fax: (312) 322-2357

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Federal Reserve Bank of Chicago

NBER Working Papers and Publications

December 2006Fixed-Term Employment Contracts in an Equilibrium Search Model
with Fernando Alvarez: w12791
This paper analyzes the effects of fixed-term contracts using a version of the Lucas and Prescott island model with undirected search. A fixed-term contract of length J is modeled as a tax on separations of workers with tenure higher than J . While in principle these policies require a very large state space to analyze the firms and households' problems, we show that equilibrium allocations solve a simple dynamic programming problem. Analyzing this problem we show that equilibrium employment dynamics are characterized by two dimensional inaction sets. Finally, to understand the effect of these contracts, we compare them with two extreme cases: for J = 1 the fixed-term contracts are equivalent to the case of firing taxes, and for large J they are equivalent to the laissez-faire case. In a c...

Published: Alvarez, Fernando & Veracierto, Marcelo, 2012. "Fixed-term employment contracts in an equilibrium search model," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1725-1753. citation courtesy of

January 2000Labor-Market Policies in an Equilibrium Search Model
with Fernando Alvarez
in NBER Macroeconomics Annual 1999, Volume 14, Ben S. Bernanke and Julio J. Rotemberg, editors

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