An ex ante evaluation of economic dismissals facilitation on the French labor market: An agent-based model
Abstract:
In this paper, we use the latest WorkSim model version we have developed in Ballot, Kant & Goudet (2015) to analyze the ex-ante effects of two essential elements of the new law " El Khomri", recently proposed by the French government. Namely we model the facilitation of the economic dismissals, and the change in the wage rate for hours beyond the legal weekly duration of work (from 25% at the 36th hour and 50% at the 44th hour to 10% at the 36th hour).
The model is calibrated by the CMA-ES algorithm CMA-ES (Covariance Matrix Adaptation Evolution Strategy) designed by Hansen and Ostermeier (2001). The fitness function is minimized at the horizon of 200 periods in a steady state. Presently the steady state reproduces 64 observed variables for the year 2011 as weighted targets in the fitness function and we obtain a median standard error of 7%. There are some 63 parameters calibrated and the others are taken from the law or demographic statistics.
We present and analyze the results for 2 variants of the law. Although it has no effect on global employment after 4 years,the law is favorable to the young (15-24) at the expense of the other age categories (25-64). Moreover, the dismissals facilitation changes the nature of the labor market, where Open-Ended Contract becomes the dominant hiring contract, but also shorter and more precarious.