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R&D, innovation activity, and the use of external numerical flexibility


  • Addessi, William
  • Saltari, Enrico
  • Tilli, Riccardo


We address theoretically and empirically the impact of R&D and innovation activity (IA) on the use of external numerical flexibility (ENF). We build a firm-sided model showing that a first-order stochastic dominance shift in the productivity distribution function decreases the probability of hiring workers with temporary contracts, while a second-order shift has ambiguous effects. Next, using a dataset based on a survey of Italian manufacturing firms, we find that R&D and IA increase the extensive and intensive margins of employing workers with temporary contracts. Moreover, we disentangle the impact of different types of R&D and IA, finding that extra muros R&D always has a positive effect, while the effect of intra muros R&D is generally null. Also the effect of IA changes according to the type of activity: positive with product innovation, null with process innovation.

Suggested Citation

  • Addessi, William & Saltari, Enrico & Tilli, Riccardo, 2014. "R&D, innovation activity, and the use of external numerical flexibility," Economic Modelling, Elsevier, vol. 36(C), pages 612-621.
  • Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:612-621 DOI: 10.1016/j.econmod.2013.04.026

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    References listed on IDEAS

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    Cited by:

    1. Brown, Sarah & Greene, William H. & Harris, Mark N. & Taylor, Karl, 2015. "An inverse hyperbolic sine heteroskedastic latent class panel tobit model: An application to modelling charitable donations," Economic Modelling, Elsevier, vol. 50(C), pages 228-236.
    2. Addessi, William, 2014. "The productivity effect of permanent and temporary labor contracts in the Italian manufacturing sector," Economic Modelling, Elsevier, vol. 36(C), pages 666-672.

    More about this item


    Flexible employment; Labor contracts; R&D; Innovation activity; Stochastic dominance;

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes


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