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Temporary Employment, Job Flows and Productivity: A Tale of two Reforms

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  • Lorenzo Cappellari
  • Carlo Dell'Aringa
  • Marco Leonardi

Abstract

We investigate the effects of two reforms of temporary employment using panel data on Italian firms. We exploit variation in their implementation across regions and sectors for identification. We find that the reform of apprenticeship contracts increased job turnover and induced the substitution of external staff with firms’ apprentices, with an overall productivity-enhancing effect. The reform of fixed-term contracts instead did not produce the intended results: it induced a substitution of temporary employees in favour of permanent ones and reduced capital intensity, generating productivity losses. We estimate substitution elasticities across types of temporary contracts that are consistent with these interpretations.

Suggested Citation

  • Lorenzo Cappellari & Carlo Dell'Aringa & Marco Leonardi, 2011. "Temporary Employment, Job Flows and Productivity: A Tale of two Reforms," CESifo Working Paper Series 3520, CESifo.
  • Handle: RePEc:ces:ceswps:_3520
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    More about this item

    Keywords

    employment contracts; productivity; institutional changes;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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