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The use of flexible working contracts in West Germany: evidence from an establishment panel

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  • Boockmann, Bernhard
  • Hagen, Tobias

Abstract

This paper investigates under which conditions firms use fixed-term contracts, subcontracted and freelance work. Using a probit model which accounts for unobserved heterogeneity, we find that positive changes in expected or actual turnover are associated with a higher probability of employing atypical work, which suggests that these forms of employment are used as means of adjustment. Other important factors are employees? skill levels, investment in information technology, and the existence of collective wage agreements and works councils. Furthermore, a natural experiment is used to evaluate the impact of dismissal protection for permanent workers on the use of flexible working contracts. There is clear evidence that reducing dismissal protection decreases the demand for fixed-term employment.

Suggested Citation

  • Boockmann, Bernhard & Hagen, Tobias, 2001. "The use of flexible working contracts in West Germany: evidence from an establishment panel," ZEW Discussion Papers 01-33, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5388
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    References listed on IDEAS

    as
    1. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
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    3. Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 394-424, July.
    4. Nickell, S.J., 1987. "Dynamic models of labour demand," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 9, pages 473-522 Elsevier.
    5. Kaiser, Ulrich & Pfeiffer, Friedhelm, 2000. "Collective wage agreements and the adjustment of workers and hours in German service firms," ZEW Discussion Papers 00-33, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. William T. Dickens & Kevin Lang, 1992. "Labor Market Segmentation Theory: Reconsidering the Evidence," NBER Working Papers 4087, National Bureau of Economic Research, Inc.
    7. Lewis M. Segal & Daniel G. Sullivan, 1997. "The Growth of Temporary Services Work," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 117-136, Spring.
    8. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    9. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-764, May.
    10. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    11. Bentolila, Samuel & Saint-Paul, Gilles, 1992. "The macroeconomic impact of flexible labor contracts, with an application to Spain," European Economic Review, Elsevier, vol. 36(5), pages 1013-1047, June.
    12. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," NBER Working Papers 7557, National Bureau of Economic Research, Inc.
    13. Hunt, Jennifer, 2000. "Firing Costs, Employment Fluctuations and Average Employment: An Examination of Germany," Economica, London School of Economics and Political Science, vol. 67(266), pages 177-202, May.
    14. Stephen W. Salant, 1977. "Search Theory and Duration Data: A Theory of Sorts," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 39-57.
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    16. Franz, Wolfgang & Pfeiffer, Friedhelm, 2001. "Tarifbindung und die ökonomische Rationalität von Lohnrigiditäten," ZEW Discussion Papers 01-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    17. Eric Maurin, 2000. "The European Paradox : Do Flexible Contracts Create Rigid Labor Markets ?," Working Papers 2000-07, Center for Research in Economics and Statistics.
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    More about this item

    Keywords

    Flexible working contracts; fixed-term employment; labour demand; adjustment costs;

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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