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The use of flexible working contracts in West Germany: evidence from an establishment panel

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  • Boockmann, Bernhard
  • Hagen, Tobias

Abstract

This paper investigates under which conditions firms use fixed-term contracts, subcontracted and freelance work. Using a probit model which accounts for unobserved heterogeneity, we find that positive changes in expected or actual turnover are associated with a higher probability of employing atypical work, which suggests that these forms of employment are used as means of adjustment. Other important factors are employees? skill levels, investment in information technology, and the existence of collective wage agreements and works councils. Furthermore, a natural experiment is used to evaluate the impact of dismissal protection for permanent workers on the use of flexible working contracts. There is clear evidence that reducing dismissal protection decreases the demand for fixed-term employment. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 01-33.

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Date of creation: 2001
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Handle: RePEc:zbw:zewdip:5388

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Related research

Keywords: Flexible working contracts; fixed-term employment; labour demand; adjustment costs;

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References

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  1. Lewis Segal & Daniel Sullivan, 1996. "The growth of temporary services work," Working Paper Series, Macroeconomic Issues WP-96-26, Federal Reserve Bank of Chicago.
  2. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
  3. Franz, Wolfgang & Pfeiffer, Friedhelm, 2001. "Tarifbindung und die ökonomische Rationalität von Lohnrigiditäten," ZEW Discussion Papers 01-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Hunt, Jennifer, 2000. "Firing Costs, Employment Fluctuations and Average Employment: An Examination of Germany," Economica, London School of Economics and Political Science, vol. 67(266), pages 177-202, May.
  5. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May.
  6. Bentolila, Samuel & Saint-Paul, Gilles, 1992. "The macroeconomic impact of flexible labor contracts, with an application to Spain," European Economic Review, Elsevier, vol. 36(5), pages 1013-1047, June.
  7. Bruce D. Meyer, 1994. "Natural and Quasi- Experiments in Economics," NBER Technical Working Papers 0170, National Bureau of Economic Research, Inc.
  8. Salant, Stephen W, 1977. "Search Theory and Duration Data: A Theory of Sorts," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 39-57, February.
  9. Eric Maurin, 2000. "The European Paradox : Do Flexible Contracts Create Rigid Labor Markets ?," Working Papers 2000-07, Centre de Recherche en Economie et Statistique.
  10. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," NBER Working Papers 7557, National Bureau of Economic Research, Inc.
  11. Kaiser, Ulrich & Pfeiffer, Friedhelm, 2000. "Collective wage agreements and the adjustment of workers and hours in German service firms," ZEW Discussion Papers 00-33, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Katharine G. Abraham & Susan K. Taylor, 1993. "Firms' Use of Outside Contractors: Theory and Evidence," NBER Working Papers 4468, National Bureau of Economic Research, Inc.
  13. William T. Dickens & Kevin Lang, 1992. "Labor Market Segmentation Theory: Reconsidering the Evidence," NBER Working Papers 4087, National Bureau of Economic Research, Inc.
  14. Nickell, S.J., 1987. "Dynamic models of labour demand," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 9, pages 473-522 Elsevier.
  15. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
  16. Saint-Paul, Gilles, 1991. "Dynamic labor demand with dual labor markets," Economics Letters, Elsevier, vol. 36(2), pages 219-222, June.
  17. Nadiri, M Ishaq & Rosen, Sherwin, 1969. "Interrelated Factor Demand Functions," American Economic Review, American Economic Association, vol. 59(4), pages 457-71, Part I Se.
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