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R&D and Innovation Activities and the Use of External Numerical Flexibility

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  • William Addessi
  • Enrico Saltari
  • Riccardo Tilli

Abstract

We study the impact of R&D and innovation on the use of external numerical flexibility (ENF). R&D and innovation imply both a higher average and a higher volatile productivity. We investigate this ambiguous effect on the firm preference for using ENF in two steps. First, we use a simple model to show that a first-order stochastic dominance shift in the distribution function increases the probability of hiring permanent workers, while a second-order shift has ambiguous effects. Next, using a dataset based on a survey of Italian manufacturing firms, we run logit regressions to estimate the effect of R&D and innovation on the probability of employing a fixed-term or a TWA worker, finding a positive and always significant effect. We also consider internal and external R&D and different types of innovation. Results show that the former has a positive effect while the latter depends on the type of innovation.

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Bibliographic Info

Paper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 150.

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Length: 26
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:sap:wpaper:wp150

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Keywords: Flexible employment; Labor contracts; Research and Development; Innovation.;

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  1. Andrea Caggese & Vicente Cuñat, 2006. "Financing constraints and fixed-term employment contracts," Economics Working Papers 1010, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Koeniger, Winfried, 2005. "Dismissal costs and innovation," Economics Letters, Elsevier, vol. 88(1), pages 79-84, July.
  3. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA).
  4. Haibo Zhou & Ronald Dekker & Alfred Kleinknecht, 2011. "Flexible labor and innovation performance: evidence from longitudinal firm-level data," Industrial and Corporate Change, Oxford University Press, vol. 20(3), pages 941-968, June.
  5. Cecilia Albert & Carlos García-Serrano & Virginia Hernanz, 2004. "Firm-provided training and temporary contracts," Spanish Economic Review, Springer, vol. 7(1), pages 67-88, January.
  6. Mirella Damiani & Fabrizio Pompei, 2010. "Labour Protection and Productivity in EU Economies: 1995-2005," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 7(2), pages 373-411, December.
  7. Saltari, Enrico & Tilli, Riccardo, 2009. "The role and significance of endogenous firing costs in a matching model with endogenous job destruction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 799-808, October.
  8. Hirsch, Boris & Mueller, Steffen, 2010. "Temporary agency work and the user firm's productivity: First evidence from German Panel Data," Discussion Papers 68, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  9. Saltari, Enrico & Tilli, Riccardo, 2011. "Firing costs and labor market tightness: Is there any relationship?," Research in Economics, Elsevier, vol. 65(1), pages 1-4, March.
  10. Lisi, Domenico, 2009. "The Impact of Temporary Employment on Labour Productivity: Evidence from an Industry-Level Panel of EU Countries," MPRA Paper 26076, University Library of Munich, Germany.
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