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Work organization, labour contracts and employment

Author

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  • Emmanuel Dhyne
  • Benoît Mahy

Abstract

Purpose - To ease adjustments in the labour market, many countries have softened their legislation since the 1970s by introducing flexible labour contracts or by making their use easier. The purpose of this paper is to document labour management of temporary contracts during the last 20 years in Belgium, compared to the situation in its neighbouring countries. The authors investigate the determinants of the use of flexible labour contracts and the consequences of their introduction on labour dynamics. Design/methodology/approach - A dynamic Probit is considered to model the use of fixed term labour contracts (FTCs) and standard dynamic labour demand equations are used to test the impact of labour contracts on the labour adjustment at the firm level, using a panel of around 8,000 firms during the period 1998‐2005. Findings - The results indicate that some firms follow labour management based on a core (indefinite term contracts – ITCs) and a peripheral component (FTCs) and manage temporary contracts on a “permanent” basis, from a long run perspective. Estimates also confirm a much faster temporary contracts employment adjustment, while ITCs adjustment does not depend on whether firms employ FTCs. ITCs short‐term employment elasticity with respect to wages suggests that workers protection against redundancies is strengthened when firms manage work organisation with both types of contracts. In contrast to ITCs, FTCs are used to meet unexpected demand shocks. Originality/value - This paper contributes to the growing literature on the impact of the introduction of new flexible contracts on the labour demand at the firm level.

Suggested Citation

  • Emmanuel Dhyne & Benoît Mahy, 2012. "Work organization, labour contracts and employment," International Journal of Manpower, Emerald Group Publishing Limited, vol. 33(3), pages 246-263, June.
    • Handle: RePEc:eme:ijmpps:v:33:y:2012:i:3:p:246-263
    DOI: 10.1108/01437721211234147
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    Citations

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    Cited by:

    1. François Rycx & Yves Saks & Ilan Tojerow, 2015. "Does Education Raise Productivity and Wages Equally? The Moderating Roles of Age, Gender and Industry," Working Paper Research 281, National Bank of Belgium.
    2. Romina Giuliano & Stephan Kampelmann & Benoît Mahy & François Rycx, 2017. "Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 421-449, June.
    3. Ahmed Fayez Abdelgouad, 2015. "Determinants of Using Fixed-Term Contracts in the Egyptian Labor Market: Empirical Evidence from Manufacturing Firms Using World Bank Firm-Level Data for Egypt," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 4(1), pages 29-48.

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