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Temporary employment, demand volatility and unions: Firm-level evidence

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  • Francesco Devicienti
  • Paolo Naticchioni
  • Andrea Ricci

Abstract

This paper investigates the effect of workplace unionization and product market volatility on firms' propensity to use temporary employment. Using Italian firm level data, we show that unionization and volatility have a positive impact on the share of temporary contracts. However, as volatility increases the union effect becomes negative, suggesting that in a highly volatile economic environment unions may be concerned about the weakening of their bargaining power associated with an extensive use of temporary workers. Furthermore, these effects are at work only for the use of non-training temporary contracts, while training temporary contracts are not affected by unions, volatility and their interplay. We argue that this occurs because non-training temporary contracts can be used by firms as a buffer stock to cope with uncertainty and by unions to protect insiders, while training temporary contracts are more likely to be used as a screening device for future permanent positions.

Suggested Citation

  • Francesco Devicienti & Paolo Naticchioni & Andrea Ricci, 2015. "Temporary employment, demand volatility and unions: Firm-level evidence," Carlo Alberto Notebooks 434, Collegio Carlo Alberto.
  • Handle: RePEc:cca:wpaper:434
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    1. Belloc, Filippo & Burdin, Gabriel & Landini, Fabio, 2020. "Corporate Hierarchies under Employee Representation," IZA Discussion Papers 13717, Institute of Labor Economics (IZA).
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    3. G. Sulis & M. Conti & M. Bratti, 2018. "Employment Protection, Temporary Contracts and Firm-provided Training: Evidence from Italy," Working Paper CRENoS 201802, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    4. d'Agostino, Giorgio & Raitano, Michele & Scarlato, Margherita, 2019. "Job mobility and heterogeneous returns to apprenticeship training in Italy," MPRA Paper 92261, University Library of Munich, Germany.
    5. Cardullo, Gabriele & Conti, Maurizio & Sulis, Giovanni, 2018. "Unions, Two-Tier Bargaining and Physical Capital Investment: Theory and Firm-Level Evidence from Italy," IZA Discussion Papers 12008, Institute of Labor Economics (IZA).
    6. Patrizia Ordine & Giuseppe Rose & Gessica Vella, 2017. "The Effect of Temporary Agency Workers on Wage of Permanent Employees: Evidence From Linked Employer-Employee Data," LABOUR, CEIS, vol. 31(4), pages 415-432, December.
    7. Burdin, Gabriel & Pérotin, Virginie, 2019. "Employee representation and flexible working time," Labour Economics, Elsevier, vol. 61(C).
    8. Bassanini, Andrea & Caroli, Eve & Fontaine, François & Rebérioux, Antoine, 2021. "Escaping social pressure: Fixed-term contracts in multi-establishment firms," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 697-715.
    9. Marianna Belloc & Paolo Naticchioni & Claudia Vittori, 2018. "Urban Wage Premia, Cost of Living, and Collective Bargaining," CESifo Working Paper Series 7253, CESifo.
    10. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2019. "Employment Protection and Firm-Provided Training: Quasi-Experimental Evidence from a Labour Market Reform," IZA Discussion Papers 12773, Institute of Labor Economics (IZA).
    11. Mirella Damiani & Fabrizio Pompei & Andrea Ricci, 2020. "Opting Out, Collective Contracts and Labour Flexibility: Firm‐Level Evidence for The Italian Case," British Journal of Industrial Relations, London School of Economics, vol. 58(3), pages 558-586, September.
    12. Devicienti, Francesco & Manello, Alessandro & Vannoni, Davide, 2017. "Technical efficiency, unions and decentralized labor contracts," European Journal of Operational Research, Elsevier, vol. 260(3), pages 1129-1141.
    13. Damiani, Mirella & Pompei, Fabrizio & Kleinknecht, Alfred, 2020. "When robots do (not) enhance job quality: The role of innovation regimes," MPRA Paper 103059, University Library of Munich, Germany.
    14. Addison, John T. & Teixeira, Paulino & Grunau, Philipp & Bellmann, Lutz, 2018. "Worker Representation and Temporary Employment in Germany: The Deployment and Extent of Fixed-Term Contracts and Temporary Agency Work," IZA Discussion Papers 11378, Institute of Labor Economics (IZA).
    15. Berton, Fabio & Dughera, Stefano & Ricci, Andrea, 2021. "Are Unions Detrimental to Innovation? Theory and Evidence," IZA Discussion Papers 14102, Institute of Labor Economics (IZA).
    16. A. Arrighetti & E. Bartoloni & F. Landini & C. Pollio, 2019. "Exuberant proclivity towards non-standard employment: evidence from linked employer-employee data," Economics Department Working Papers 2019-EP02, Department of Economics, Parma University (Italy).
    17. Cardullo, Gabriele & Conti, Maurizio & Sulis, Giovanni, 2020. "A model of unions, two-tier bargaining and capital investment," Labour Economics, Elsevier, vol. 67(C).
    18. IKEUCHI Kenta & FUKAO Kyoji & Cristiano PERUGINI, 2021. "Establishment Size, Workforce Composition and the College Wage Gap in Japan," Discussion papers 21022, Research Institute of Economy, Trade and Industry (RIETI).
    19. Fabrizio Pompei & Mirella Damiani & Andrea Ricci, 2019. "Family firms, performance-related pay, and the great crisis: evidence from the Italian case," Industrial and Corporate Change, Oxford University Press, vol. 28(5), pages 1193-1225.
    20. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2021. "Employment protection and firm-provided training in dual labour markets," Labour Economics, Elsevier, vol. 69(C).
    21. Belloc, Filippo & Burdin, Gabriel & Landini, Fabio, 2020. "Robots and Worker Voice: An Empirical Exploration," IZA Discussion Papers 13799, Institute of Labor Economics (IZA).
    22. Joonmo Cho & Jinha Kim, 2018. "Identifying Factors Reinforcing Robotization: Interactive Forces of Employment, Working Hour and Wage," Sustainability, MDPI, Open Access Journal, vol. 10(2), pages 1-21, February.
    23. Bassanini, Andrea & Caroli, Eve & Fontaine, François & Rebérioux, Antoine, 2021. "Escaping social pressure: Fixed-term contracts in multi-establishment firms," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 697-715.

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    More about this item

    Keywords

    unions; temporary workers; training; product demand volatility; firms;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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