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Flexible labor and innovation performance: Evidence from longitudinal firm-level data

  • dekker, R

    ()

    (TU Delft, Technology, Policy and Management, Innovation Systems
    Tilburg University, ReflecT)

  • Kleinknecht, A.H.

    ()

    (TU Delft, Technology, Policy and Management, Innovation Systems)

  • Zhou, H

    (Erasmus University Rotterdam, Erasmus School of Economics, CASBEC Classification_JEL: J5; M5; O15; O31)

Firms with high shares of workers on fixed-term contracts have significantly higher sales of imitative new products but perform significantly worse on sales of innovative new products (“first on the market”). High functional flexibility in “insider-outsider” labor markets enhances a firm’s new product sales, as do training efforts and highly educated personnel. We find weak evidence that larger and older firms have higher new product sales than do younger and smaller firms. Our findings should be food for thought to economists making unqualified pleas for the deregulation of labor markets.

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Paper provided by Delft University of Technology, Faculty of Technology, Policy and Management in its series Economics and Management of Innovation Working Papers with number 2010-1.

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Date of creation: 12 Apr 2010
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Handle: RePEc:dgr:tudemi:20101
Contact details of provider: Web page: http://www.tbm.tudelft.nl

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  1. Malcomson, J.M., 1997. "Contracts, hold-up and labor markets," Discussion Paper Series In Economics And Econometrics 9703, Economics Division, School of Social Sciences, University of Southampton.
  2. Lewis M. Segal & Daniel G. Sullivan, 1995. "The temporary labor force," Economic Perspectives, Federal Reserve Bank of Chicago, issue Mar, pages 2-19.
  3. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence," Economic Policy, CEPR;CES;MSH, vol. 18(36), pages 9-72, 04.
  4. Akkermans, Dirk & Castaldi, Carolina & Los, Bart, 2007. "Do ‘Liberal Market Economies’ Really Innovate More Radically than ‘Coordinated Market Economies’? Hall & Soskice Reconsidered," GGDC Research Memorandum GD-91, Groningen Growth and Development Centre, University of Groningen.
  5. Keld Laursen & Nicolai J. Foss, 2003. "New human resource management practices, complementarities and the impact on innovation performance," Cambridge Journal of Economics, Oxford University Press, vol. 27(2), pages 243-263, March.
  6. Harry J. Holzer, 1987. "Hiring Procedures in the Firm: Their Economic Determinants and Outcomes," NBER Working Papers 2185, National Bureau of Economic Research, Inc.
  7. 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.
  8. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages F189-F213, June.
  9. Alfred Kleinknecht & Kees Van Montfort & Erik Brouwer, 2002. "The Non-Trivial Choice between Innovation Indicators," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(2), pages 109-121.
  10. Lorenz, Edward, 1999. "Trust, Contract and Economic Cooperation," Cambridge Journal of Economics, Oxford University Press, vol. 23(3), pages 301-15, May.
  11. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752, March.
  12. Rosario Sanchez & Luis Toharia, 2000. "Temporary workers and productivity: the case of Spain," Applied Economics, Taylor & Francis Journals, vol. 32(5), pages 583-591.
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