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Is There a Trade-off Between Labour Flexibility and Productivity Growth? Some Evidence from Italian Firms

In: Non-Standard Employment and Quality of Work. The Case of Italy

Author

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  • Federico Lucidi

    (Fondazione Giacomo Brodolini)

Abstract

This chapter deals with the empirical testing of the potential trade-off between flexibility and productivity growth by using firm-level data. The model of reference relies on various works by Sylos-Labini, The model is estimated on data from the 9th “Indagine sulle imprese manifatturiere”, conducted by the Capitalia Bank Research Centre (formerly Mediocredito Centrale) in the period 2001-2003, where ‘flexibility’ indicators are included among the factors explaining labour productivity growth at firm level. Amongst the results obtained the estimation shows that firms exhibiting a higher share of temporary workers in their workforces and a higher rate of labour turnover achieved a slower growth of value added per worker in the period 2001-2003. Moreover, lagged labour costs per employee (both in levels and in changes) have a significant role in explaining labour productivity growth during the period: a decreasing wage bill makes it possible to preserve low-productive jobs and labour-intensive productive processes, curbing incentives for their modernization and the adoption of new technologies. These considerations raise some doubts concerning the sustainability of both labour-market reforms and continuing wage restraint policies in the long run.

Suggested Citation

  • Federico Lucidi, 2012. "Is There a Trade-off Between Labour Flexibility and Productivity Growth? Some Evidence from Italian Firms," AIEL Series in Labour Economics, in: Tindara Addabbo & Giovanni Solinas (ed.), Non-Standard Employment and Quality of Work. The Case of Italy, edition 1, chapter 13, pages 261-285, AIEL - Associazione Italiana Economisti del Lavoro.
    • Handle: RePEc:ail:chapts:06-13
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    Citations

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    Cited by:

    1. Renzo Orsi & Francesco Turino, 2014. "The last fifteen years of stagnation in Italy: a business cycle accounting perspective," Empirical Economics, Springer, vol. 47(2), pages 469-494, September.
    2. Fabio Berton & Matteo Richiardi & Stefano Sacchi, 2013. "Non-standard work, low-paid work and employment dynamics: evidence from an occupational perspective," Carlo Alberto Notebooks 336, Collegio Carlo Alberto.
    3. Amoroso, Sara & Martino, Roberto, 2020. "Regulations and technology gap in Europe: The role of firm dynamics," European Economic Review, Elsevier, vol. 129(C).
    4. Calcagnini, Giorgio & Marin, Giovanni & Perugini, Francesco, 2021. "Labour flexibility, internal migration and productivity in Italian regions," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 308-320.

    More about this item

    Keywords

    flexibility; temporary work; firm's competitiveness; productivity growth.;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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