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The productivity effect of permanent and temporary labor contracts in the Italian manufacturing sector

  • Addessi, William
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    This paper studies the effect of permanent and temporary labor contracts on both labor-augmenting and TFP-augmenting technological factors using a panel dataset of Italian manufacturing firms. The empirical analysis applies a structural approach in which firm TFP follows a controlled Markov process that is affected by the relative use of labor contracts, and labor services are perfect substitutes but with different labor-augmenting factors. The empirical results show that when including labor-contract composition in the TFP process: i) the difference between permanent and temporary contracts in the labor-augmenting productivity factor is not significant and ii) the incidence of permanent contracts in total contracts has a positive effect on TFP dynamics.

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    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 36 (2014)
    Issue (Month): C ()
    Pages: 666-672

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    Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:666-672
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