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Uncertainty, flexible labour relations and R&D expenditure

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  • Marco Di Cintio
  • Emanuele Grassi

Abstract

This paper examines the effects of uncertainty and flexible labour contracts on the Research and Development (R&D) expenditure. Using a panel of Italian manufacturing firms, we find a hump-shaped relationship between workforce flexibility and R&D outlays. Moreover, as predicted by the real options theory, our results suggest that product market uncertainty reduces R&D efforts and that flexible labour contracts countervail the adverse effect of uncertainty on R&D.

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Bibliographic Info

Paper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI RP 2013/13.

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Date of creation: 13 Dec 2013
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Handle: RePEc:eei:rpaper:eeri_rp_2013_13

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Keywords: Real options theory; R&D; uncertainty; temporary workers.;

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