Lisi, Domenico (2009): The Impact of Temporary Employment on Labour Productivity: Evidence from an Industry-Level Panel of EU Countries.
Download (694Kb) | Preview
In recent years the availability of new industry-level data allowed to evaluate the impact of labour market policies more consistently than previous standard cross-country studies. In this paper an industry-level panel is exploited to evaluate the impact of less stringent Employment Protection Legislation (EPL) for temporary employment (TE) in EU countries. A reduced form model is estimated to identify the overall effect on labour productivity growth. The advantage of using industry-level data is fourfold. First, as in standard cross-country studies, the cross-country variation of EPL is still exploited. Second, in contrast with the cross-country analysis, the specification allows us to control for unobserved fixed effects, potentially correlated with the level of EPL. Third, as the previous literature emphasised, the within-industry “composition effect” appears to be negligible, allowing us to identify the “independent effect” of TE. Fourth, to the extent that events in a single industry are not able alone to affect the policy in a country, the specification is less subject to the simultaneity problem between variable of interest and policy. The theoretical literature on TE has not established a clear prediction on the sign of the effect, existing different convincing reasons for both directions. Thus, the results of the analysis have potentially important policy implications. Our finding is that the introduction of temporary contracts has a negative, even if small in magnitude, effect on labour productivity growth.
|Item Type:||MPRA Paper|
|Original Title:||The Impact of Temporary Employment on Labour Productivity: Evidence from an Industry-Level Panel of EU Countries|
|Keywords:||labour productivity; temporary employment; EPL; difference-in-differences|
|Subjects:||J - Labor and Demographic Economics > J0 - General > J08 - Labor Economics Policies
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
|Depositing User:||Domenico Lisi|
|Date Deposited:||23. Oct 2010 14:07|
|Last Modified:||14. Feb 2013 13:15|
Autor, D., Donohue, J. and Schwab, S.J. (2006), ‘The Costs of Wrongful-Discharge Laws’, Review of Economics and Statistics, vol. 88 (2), pp. 211-231.
Autor, D., Kerr, W. and Kugler, A. (2007), ‘Does employment protection reduce productivity? Evidence from US states’, Economic Journal, vol. 117, pp. F189–F117.
Baker, D., Glyn, A., Howell, D. and Schmitt, J. (2004), ‘Labour Market Institutions and Unemployment: Assessment of the Cross-Country Evidence’, in D. Howell (ed.), Fighting Unemployment: the limits of free market orthodoxy, Oxford University Press, Oxford.
Bartelsman, E.J. and Hinloopen, J. (2005), ‘Unleashing animal spirits: investment in ICT and economic growth’, in L. Soete and B. ter Weel (eds.), The Economics of the Digital Society, Cheltenham, UK and Northampton, MA, USA Edward Elgar.
Bassanini, A., Booth, A.L., Brunello, G., De Paola, M. and Leuven, E. (2007), ‘Workplace Training in Europe’, in G. Brunello, P. Garibaldi and E. Wasmer (eds.), Education and Training in Europe, Oxford University Press, Oxford.
Bassanini, A., Nunziata, L. and Venn, D. (2009), ‘Job protection legislation and productivity growth in OECD countries’, Economic Policy, vol. 24 (58), pp. 349–402.
Bassanini, A. and Venn, D. (2007), ‘Assessing the Impact of Labour Market Policies on Productivity: A Difference-in-Differences Approach’, OECD Social Employment and Migration Working Papers, No. 54, OECD Publishing.
Belot, M., Boone, J. and Ours van, J.C. (2002), ‘Welfare Effects of Employment Protection’, CEPR Discussion Paper No. 3396.
Bentolila, S. and Bertola, G. (1990), ‘How bad is eurosclerosis’, Review of Economic Studies, vol. 57 (3), pp. 381–402.
Bentolila, S. and Dolado, J. (1994), ‘Labour flexibility and wages: lessons from Spain’, Economic Policy, vol. 18, pp. 55-99.
Bertola, G. (1990), ‘Job security, employment and wages’, European Economic Review, vol. 34 (4), pp. 851–866.
Blanchard, O. and Portugal, P. (2001), ‘What Hides Behind an Unemployment Rate. Comparing Portuguese and US unemployment’, American Economic Review, vol. 91 (1), pp. 187–207.
Boeri, T. and Garibaldi, P. (2007), ‘Two Tier Reforms of Employment Protection Legislation. A Honeymoon Effects’, The Economic Journal, vol. 117, pp. 357–385.
Ciccone, A. and Papaioannou, E. (2006), ‘Adjustment to Target Capital, Finance and Growth’, mimeograph, UPF.
Ciccone, A. and Papaioannou, E. (2007), ‘Red Tape and Delayed Entry’, The Journal of European Economic Association, Papers and Proceedings, pp. 444–458.
Cingano, F., Leonardi, M., Messina, J. and Pica, G. (2009), ‘The effect of Employment Protection Legislation and Financial Market Imperfections on Investment: Evidence from a Firm-Level Panel of EU countries’, mimeo.
Davis, S.J. and Haltiwanger, J.C. (1992), ‘Gross Job Creation, Gross Job Destruction and Employment Reallocation’, The Quarterly Journal of Economics, August, vol. 107 (3), pp. 819–863.
DeFreitas, G. and Marshall, A. (1998), ‘Labour Surplus, Worker Rights and Productivity Growth: A Comparative Analysis of Asia and Latin America’, Labour, vol. 12 (3), pp. 515–539.
Engellandt, A. and Riphahn, R. (2004), ‘Temporary Contracts and Employee Effort’, CEPR Discussion Paper No. 4178.
Fella, G. (2004), ‘Efficiency Wage and Efficient Redundancy pay’, European Economic Review, vol. 44, pp. 1473–1490.
Garibaldi, P. (1998), ‘Job Flow Dynamics and Firing Restrictions’, European Economic Review, vol. 42 (2), pp. 245–275.
Garibaldi, P. and Violante, G. (2005), ‘The Employment Effects of Severance Payments with Wage Rigidities’, The Economic Journal, vol. 115, pp. 799–832.
Hopenhayn, H. and Rogerson, R. (1993), ‘Job Turnover and Policy Evaluation: A General Equilibrium Analysis’, The Journal of Political Economy, vol. 101 (5), pp. 915–938.
Ichino, A. (2006), ‘Come superare il dualismo nel mercato del lavoro’, http://www.lavoce.info, Lavoro.
Ichino, A. and Riphahn, R.T. (2005), ‘The Effect of Employment Protection on Worker Effort: A Comparison of Absenteeism During and After Probation’, Journal of the European Economic Association, vol. 3 (1), pp. 120–143.
Koeniger, W. (2005), ‘Dismissal Costs and Innovation’, Economics Letters, vol. 88 (1), pp. 79–85.
Jackman, R., Layard, R. and Nickell, S.J. (1996), ‘Combatting Unemployment: Is Flexibility Enough?’, CEP Discussion Paper No. 0293.
Lazear, E.P. (1990), ‘Job Security Provisions and Employment’, The Quarterly Journal of Economics, August, pp. 699–726.
Lisi, D. (2007), ‘Analysis of Employment Protection Legislation: a model with endogenous labour productivity’, mimeo.
Messina, J. and Vallanti, G. (2007), ‘Job Flow Dynamics and Firing Restrictions: the European Evidence’, The Economic Journal, vol. 117, pp. 279–301.
Micco, A. and Pages, C. (2004), ‘Employment protection and gross job flows: a difference-in-differences approach’, mimeograph, World Bank.
Micco, A. and Pages, C. (2006), ‘The Economic Effects of Employment Protection: Evidence from International Industry-Level Data’, IZA Discussion Paper No. 2433.
Mortensen, D.T. and Pissarides, C.A. (1999), ‘Unemployment responses to “skill-biased” shocks: The role of labour market policy’, Economic Journal, vol. 109, pp. 242–265.
Nickell, S. (1978), ‘Fixed Costs, Employment and Labour Demand over the Cycle’, Economica, vol. 45, pp. 329–345.
Nickell, S. (1986), ‘Dynamic models of labour demand under uncertainty’, in O. Ashenfelter and R. Layard (eds.), Handbook of Labour Economics, Amsterdam, North Holland.
Nickell, S. and Layard, R. (1999), ‘Labour Market Institutions and Economic Performance’, in O. Ashenfelter and D. Card (eds.), Handbook of Labour Economics, Amsterdam, North Holland.
Nickell, S., Nunziata, L. and Ochel, W. (2005), ‘Unemployment in the OECD Since the 1960s. What Do We Know?’, Economic Journal, vol. 115, pp. 1–27.
OECD (1999), OECD Employment Outlook, OECD, Paris.
OECD (2002), OECD Employment Outlook, OECD, Paris.
OECD (2003), The Sources of Economic Growth in OECD Countries, OECD, Paris.
OECD (2004), OECD Employment Outlook, OECD, Paris.
OECD (2007), OECD Employment Outlook, OECD, Paris.
Rajan, R. and Zingales, L. (1998), ‘Financial Dependence and Growth’, American Economic Review, vol. 88, pp. 559–586.
Riphahn, R.T. (2004), ‘Employment Protection and Effort Among German Employees’, Economics Letters, vol. 85 (3), pp. 353–357.
Saint-Paul, G. (1997), ‘Is Labour Rigidity Harming Europe’s Competitiveness? The Effect of Job Protection on the Pattern of Trade and Welfare’, European Economic Review, vol. 41 (3–5), pp. 499–506.
Saint-Paul, G. (2002), ‘Employment Protection, International Specialization and Innovation’, European Economic Review, vol. 46 (2), pp. 375–395.
Samaniego, R. (2006), ‘Employment protection and high-tech aversion’, Review of Economic Dynamics, vol. 9 (2), pp. 224–241.
Solow, R. (2002), ‘Is Fiscal Policy Possible? Is it Desirable?’ Presidential address to the XIII World Congress of the International Economic Association, September, Lisbon.