Reducing labour market flexibility: A causal inference study on reform in The Netherlands

We investigate whether the Balanced Labour Market Act (WAB) of 2020, intended to reduce the disparity between permanent and temporary employees in The Netherlands, has achieved its desired aim. Using a synthetic control method, we find that the introduction of the WAB led to a substantial reduction in the number of temporary contracts, whereas the number of permanent workers increased. As of the WAB's announcement in May 2019, strong anticipatory effects were evident. Inconclusive evidence of unintended side-effects, such as the substitution of temporary workers by self-employment work schemes, marks an avenue for future research.