Volatility, Nonstandard Employment, and Productivity: An empirical analysis using firm-level data
This paper empirically analyzes the relationship among the volatility of sales, nonstandard employment, and firm productivity by using panel data of more than 8,000 Japanese firms from 1994 to 2006. Globalization and innovation are highlighted as the forces that increase the volatility of firm performance, which, in turn, increases the demand for flexible labor forces. After controlling for various observable firm characteristics, the volatility of a firm's sales growth is a significant determinant of the ratio of nonstandard employees. This relationship is stronger for manufacturing firms. Among the highly volatile firms, the ratio of nonstandard employees has a positive relationship with productivity. These results suggest that the desirable policy mix for the economy is a combination of the provision of sufficient safety net and training opportunities for nonstandard workers and the enactment of reasonable laws and regulations that enable firms to adjust labor input flexibly.
|Date of creation:||Apr 2010|
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