Flexible labor and innovation performance: Evidence from longitudinal firm-level data

Firms with high shares of workers on fixed-term contracts have significantly higher sales of imitative new products but perform significantly worse on sales of innovative new products (“first on the market”). High functional flexibility in “insider-outsider” labor markets enhances a firm’s new product sales, as do training efforts and highly...

Little innovation, many jobs. An econometric analysis of the Italian labour productivity crisis

During the past twenty years, Italy has realized changes in labour legislation, leading to a decentralization of wage bargaining and increased flexibility in labour relations. Both these factors have helped to curb wage growth and to enhance employment growth, but have also led to a crisis in Italian labour productivity growth. Our estimates...

Is wage-cost saving labor market deregulation a free lunch? Evidence from 19 OECD countries, 1960-2004

Labour productivity growth determines wage growth, but there is also a causal link in the opposite direction. Our panel data analysis of 19 OECD countries (1960-2004) shows that a one-percentage point change in growth rates of real wages corresponds to 0.31 - 0.39 percentage points change in labour productivity growth. This finding casts doubt...