55

Temporary jobs have spread in an important way during the nineties, especially on the Belgian labour market. From a labour demand point of view, we first stress on the reasons why they might reduce labour adjustment (firing) costs and to a lesser extent other labour costs, but why they might also lower labour productivity. Net effects of temporary jobs are then estimated on dynamic labour demand, assuming that firms are in a monopolistic competition market structure and face quadratic and symetric adjustment costs. The relation is estimated on a panel of 5551 firms observed during the period 1996-2000, using the Blundell and Bond GMM estimator. Our results suggest that higher flexibility through temporary jobs significantly favours the adjustment process but does not influence employment level.