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Heterogeneity matters: temporary employment, productivity and wages in Italian firms

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  • Valeria Cirillo

    (University of Bari “Aldo Moro”)

  • Andrea Ricci

    (National Institute for Public Policies Analysis, INAPP)

Abstract

This study analyses the relationship between flexible employment, productivity and wages, along their distributions. We use an original firm-level dataset, which combines information on workplace characteristics from Rilevazione su Imprese e Lavoro (RIL) with the Analisi Informatizzata delle Aziende Italiane (AIDA) balance sheet information for the universe of Italian non-agriculture/financial corporations. We employ different quantile regression models to panel data and find, first, that use of temporary contracts is associated to a reduction in labour productivity and wages at each point in the corresponding distribution; and second, that the negative relationship between labour productivity and wages decreases in magnitude along the quantiles of the productivity and wage distributions, suggesting that low-productive/low-wage firms use temporary employment to permanently staff positions and to compress labour costs.

Suggested Citation

  • Valeria Cirillo & Andrea Ricci, 2022. "Heterogeneity matters: temporary employment, productivity and wages in Italian firms," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(2), pages 567-593, July.
    • Handle: RePEc:spr:epolit:v:39:y:2022:i:2:d:10.1007_s40888-020-00197-2
    DOI: 10.1007/s40888-020-00197-2
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    More about this item

    Keywords

    Labour productivity; Wages; Temporary employment; Firm-level analysis; Quantile regressions;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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