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

Author

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  • Cappellari, Lorenzo

    () (Università Cattolica del Sacro Cuore)

  • Dell’Aringa, Carlo

    () (Università Cattolica del Sacro Cuore)

  • Leonardi, Marco

    () (University of Milan)

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. Our results show 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 external staff and reduced capital intensity, generating productivity losses. We estimate substitution elasticities across various types of temporary contracts that are consistent with this interpretation.

Suggested Citation

  • Cappellari, Lorenzo & Dell’Aringa, Carlo & Leonardi, Marco, 2012. "Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms," IZA Discussion Papers 6526, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6526
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    More about this item

    Keywords

    employment contracts; productivity; institutional changes;

    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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