IDEAS home Printed from https://ideas.repec.org/a/taf/irapec/v20y2006i2p171-187.html
   My bibliography  Save this article

Flexible Labour, Firm Performance and the Dutch Job Creation Miracle

Author

Listed:
  • Alfred Kleinknecht
  • Remco Oostendorp
  • Menno Pradhan
  • C. W. M. Naastepad

Abstract

Unlike internal ('functional') forms of flexibility of labour, external ('numerical') forms of flexibility (i.e. high shares of people on temporary contract or a high turnover of personnel) yield substantial savings on a firm's wage bill. Savings on wage bills lead to higher job growth, but do not translate into higher sales growth. Externally flexible labour appears to be related to lower labour productivity growth, the effects being different for innovating vs non-innovating firms. We discuss these findings from firm-level and worker-level data against the background of the Dutch job creation miracle during the 1980s and 1990s. Modest wage increases and flexibilization of labour markets may indeed create lots of jobs. However, this is likely to happen at the expense of labour productivity growth, raising serious doubts about the long-run sustainability of a low-productivity-high-employment growth path.

Suggested Citation

  • Alfred Kleinknecht & Remco Oostendorp & Menno Pradhan & C. W. M. Naastepad, 2006. "Flexible Labour, Firm Performance and the Dutch Job Creation Miracle," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(2), pages 171-187.
  • Handle: RePEc:taf:irapec:v:20:y:2006:i:2:p:171-187
    DOI: 10.1080/02692170600581102
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/02692170600581102
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Philip Du Caju & Catherine Fuss & Ladislav Wintr, 2012. "Downward Wage Regidity for Different Workers and Firms," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 55(1), pages 5-32.
    2. Fuss, Catherine, 2008. "How do firms adjust their wage bill in Belgium? A decomposition along the intensive and extensive margins," Working Paper Series 854, European Central Bank.
    3. Schiersch, Alexander, 2016. "Considering the (Un)observed: temporary agency work in productivity estimations," Annual Conference 2016 (Augsburg): Demographic Change 145749, Verein für Socialpolitik / German Economic Association.
    4. Larisa Smirnykh, 2016. "Is Flexible Labor Good for Innovation? Evidence from Russian Firm-level Data," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 10(4), pages 60-70.
    5. Sebastian Nielen & Alexander Schiersch, 2014. "Temporary Agency Work and Firm Competitiveness: Evidence from German Manufacturing Firms," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 365-393, July.
    6. 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.
    7. Alex Bryson, 2013. "Do temporary agency workers affect workplace performance?," Journal of Productivity Analysis, Springer, vol. 39(2), pages 131-138, April.
    8. Beckmann, Michael & Kuhn, Dieter, 2012. "Flexibility vs. screening : the performance effects of temporary agency work strategies," Working papers 2012/03, Faculty of Business and Economics - University of Basel.
    9. Lindič, Jaka & Bavdaž, Mojca & Kovačič, Helena, 2012. "Higher growth through the Blue Ocean Strategy: Implications for economic policy," Research Policy, Elsevier, vol. 41(5), pages 928-938.
    10. repec:dgr:tudemi:20101 is not listed on IDEAS
    11. Pasquale Tridico, 2012. "Italy from economic decline to the current crisis," Working Papers 0005, ASTRIL - Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
    12. Grassi, Emanuele & Di Cintio, Marco, 2012. "Uncertainty, flexible labour relations and R&D expenditure," MPRA Paper 37646, University Library of Munich, Germany.
    13. Muhammad Imran Malik & Dr. Mehboob Ahmad, 2011. "Lucky or Unlucky people: Layoff Survivors," Far East Journal of Psychology and Business, Far East Research Centre, vol. 2(2), pages 23-35, March.
    14. Wachsen, Eva & Blind, Knut, 2016. "More labour market flexibility for more innovation? Evidence from employer–employee linked micro data," Research Policy, Elsevier, vol. 45(5), pages 941-950.
    15. Sebastian NIELEN & Alexander SCHIERSCH, 2016. "Productivity in German manufacturing firms: Does fixed-term employment matter?," International Labour Review, International Labour Organization, vol. 155(4), pages 535-561, December.
    16. Fuss, Catherine, 2009. "What is the most flexible component of wage bill adjustment? Evidence from Belgium," Labour Economics, Elsevier, vol. 16(3), pages 320-329, June.
    17. Alfred Kleinknecht, 2017. "Supply-side labour market reforms: a neglected cause of the productivity crisis," Working Papers 0027, ASTRIL - Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
    18. repec:aia:aiaswp:wp115 is not listed on IDEAS
    19. Alfred Kleinknecht, 2014. "Schaden Strukturreformen des Arbeitsmarkts der Innovation?," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 40(3), pages 417-428.
    20. Sangyup Choi & Davide Furceri & Yi Huang & Prakash Loungani, 2016. "Aggregate Uncertainty and Sectoral Productivity Growth; The Role of Credit Constraints," IMF Working Papers 16/174, International Monetary Fund.
    21. Alexander Schiersch, 2015. "TFP, Labor Productivity and the (Un)observed Labor Input: Temporary Agency Work," Discussion Papers of DIW Berlin 1532, DIW Berlin, German Institute for Economic Research.
    22. Park, Sangwon & Yaduma, Natina & Lockwood, Andrew J. & Williams, Allan M., 2016. "Demand fluctuations, labour flexibility and productivity," Annals of Tourism Research, Elsevier, vol. 59(C), pages 93-112.
    23. Kato, Masatoshi & Zhou, Haibo, 2018. "Numerical labor flexibility and innovation outcomes of start-up firms: A panel data analysis," Technovation, Elsevier, vol. 69(C), pages 15-27.
    24. Stelios Gialis & Eleutheria Karnavou, 2008. "Dimensions of Atypical Forms of Employment in Thessaloniki, Greece," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 32(4), pages 882-902, December.
    25. 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.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:irapec:v:20:y:2006:i:2:p:171-187. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/CIRA20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.