Temporary Worker Protection Laws and Labor Market in Korea

Abstract

I examine the effect of the employment protection law enforced to the firms with more than 300 employees on July 1st. The law is extended to smaller firms in following years. This EPL restricts the firms to hire the fixed-term contract workers for more than two years. Under this law, the hiring cost of temporary worker (fixed-term contract workers) is increased. Applying the difference-in-differences framework using the exact year of the law-adoption, I found a negative impact on the temporary workers and thereby total employment. For the permanent workers, there was no significant effect.