Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms

Juan J. Dolado, Salvador Ortigueira, Rodolfo Stucchi

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

This paper analyzes how changes in the firing-costs gap between permanent and temporary workers affect firms’ TFP in a dual labour market. We argue that, under plausible conditions, firms’ temp-to-perm conversion rates go down when this gap increases. Temporary workers respond to lower conversion rates by exerting less effort, while firms react by providing less paid-for training. Both channels lead to a decline in TFP. We test these implications in a large panel of Spanish manufacturing firms from 1991 to 2005, looking at the effects of three labour market reforms which entailed substantial changes in the firing-costs gap. Our empirical findings provide some support for the above-mentioned mechanism.

Original languageEnglish (US)
Pages (from-to)421-459
Number of pages39
JournalSERIEs
Volume7
Issue number4
DOIs
StatePublished - Nov 1 2016

Fingerprint

Employment protection
Manufacturing firms
Firing costs
Temporary workers
Conversion rate
Labour market reform
Dual labor market

Keywords

  • Firing costs
  • Firms’ TFP
  • Temporary contracts
  • Training
  • Workers’ effort

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms. / Dolado, Juan J.; Ortigueira, Salvador; Stucchi, Rodolfo.

In: SERIEs, Vol. 7, No. 4, 01.11.2016, p. 421-459.

Research output: Contribution to journalArticle

Dolado, Juan J. ; Ortigueira, Salvador ; Stucchi, Rodolfo. / Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms. In: SERIEs. 2016 ; Vol. 7, No. 4. pp. 421-459.
@article{ef21787a7b7c4de8bbcc326288a5a8fd,
title = "Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms",
abstract = "This paper analyzes how changes in the firing-costs gap between permanent and temporary workers affect firms’ TFP in a dual labour market. We argue that, under plausible conditions, firms’ temp-to-perm conversion rates go down when this gap increases. Temporary workers respond to lower conversion rates by exerting less effort, while firms react by providing less paid-for training. Both channels lead to a decline in TFP. We test these implications in a large panel of Spanish manufacturing firms from 1991 to 2005, looking at the effects of three labour market reforms which entailed substantial changes in the firing-costs gap. Our empirical findings provide some support for the above-mentioned mechanism.",
keywords = "Firing costs, Firms’ TFP, Temporary contracts, Training, Workers’ effort",
author = "Dolado, {Juan J.} and Salvador Ortigueira and Rodolfo Stucchi",
year = "2016",
month = "11",
day = "1",
doi = "10.1007/s13209-016-0150-9",
language = "English (US)",
volume = "7",
pages = "421--459",
journal = "SERIEs",
issn = "1869-4187",
publisher = "Springer Verlag",
number = "4",

}

TY - JOUR

T1 - Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms

AU - Dolado, Juan J.

AU - Ortigueira, Salvador

AU - Stucchi, Rodolfo

PY - 2016/11/1

Y1 - 2016/11/1

N2 - This paper analyzes how changes in the firing-costs gap between permanent and temporary workers affect firms’ TFP in a dual labour market. We argue that, under plausible conditions, firms’ temp-to-perm conversion rates go down when this gap increases. Temporary workers respond to lower conversion rates by exerting less effort, while firms react by providing less paid-for training. Both channels lead to a decline in TFP. We test these implications in a large panel of Spanish manufacturing firms from 1991 to 2005, looking at the effects of three labour market reforms which entailed substantial changes in the firing-costs gap. Our empirical findings provide some support for the above-mentioned mechanism.

AB - This paper analyzes how changes in the firing-costs gap between permanent and temporary workers affect firms’ TFP in a dual labour market. We argue that, under plausible conditions, firms’ temp-to-perm conversion rates go down when this gap increases. Temporary workers respond to lower conversion rates by exerting less effort, while firms react by providing less paid-for training. Both channels lead to a decline in TFP. We test these implications in a large panel of Spanish manufacturing firms from 1991 to 2005, looking at the effects of three labour market reforms which entailed substantial changes in the firing-costs gap. Our empirical findings provide some support for the above-mentioned mechanism.

KW - Firing costs

KW - Firms’ TFP

KW - Temporary contracts

KW - Training

KW - Workers’ effort

UR - http://www.scopus.com/inward/record.url?scp=84996523362&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84996523362&partnerID=8YFLogxK

U2 - 10.1007/s13209-016-0150-9

DO - 10.1007/s13209-016-0150-9

M3 - Article

AN - SCOPUS:84996523362

VL - 7

SP - 421

EP - 459

JO - SERIEs

JF - SERIEs

SN - 1869-4187

IS - 4

ER -