%0 Report
        %A Centeno, Mario
%A Novo, Alvaro A.
        %T Paying for Others' Protection: Causal Evidence on Wages in a Two-Tier System
        %D 2014
        %8 2014 Dec
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 8702
        %U https://www.iza.org/publications/dp8702
        %X In a segmented labor market, theory predicts that employment protection has an asymmetric impact on entry and incumbent wages. We explore a reform that increased the protection of open-ended contracts for a well-defined subset of firms, while leaving it unchanged for other firms. The causal evidence points to a reduction in wages for new open-ended and fixed-term contracts and no impact for more tenured workers. The reductions estimated for entrants oscillate between -0.9 and -0.5 p.p., covering a significant part of the expected increase in firing costs. Firms with larger shares of fixed-term contracts shifted the burden to these workers.
        %K wages
%K two-tier systems
%K quasi-experiment
%K employment protection