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Is flexible labour good for innovation? Evidence from firm-level data

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  • Alfred Kleinknecht
  • Flore N. van Schaik
  • Haibo Zhou

Abstract

Whether the use of flexible workers is damaging to innovation or not depends on the dominant innovation regime in a sector. In sectors with a ‘routinised’ innovation regime, high shares of low-paid temporary workers have a negative impact on the probability that firms invest in R&D. In sectors that tend towards a ‘garage business’ regime, however, flexibility has no impact. The two innovation regimes differ in the nature of their knowledge base: reliance on generally available knowledge or dependence on a firm’s historically accumulated knowledge base. Innovation in the latter regime benefits from longer job durations. Our results are consistent with findings in macro-level studies that coordinated market economies with rigid labour markets have higher labour productivity gains than liberalised market economies.

Suggested Citation

  • Alfred Kleinknecht & Flore N. van Schaik & Haibo Zhou, 2014. "Is flexible labour good for innovation? Evidence from firm-level data," Cambridge Journal of Economics, Oxford University Press, vol. 38(5), pages 1207-1219.
  • Handle: RePEc:oup:cambje:v:38:y:2014:i:5:p:1207-1219.
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    File URL: http://hdl.handle.net/10.1093/cje/bet077
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