Determinants for Labour Contract Length: A French Microeconometric Study

Two types of analyses are conducted to explain the determinants of labour contracts length. The first analysis emphasizes on the contracting costs and the level of uncertainty. The second analysis focuses on the incentive and selection effect of the contract length. This paper test the determinants for contract duration by means of econometric duration models. The estimates are carried out from French data (TDE). An econometric treatment of the endogeneity of the labour contract status and unobservable heterogeneity is carried out. Our results show that wages positively affect employment duration. This confirms the positive effect of contracting costs reported.