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

44 Pages Posted: 21 Jul 2011

See all articles by Lorenzo Cappellari

Lorenzo Cappellari

Catholic University of the Sacred Heart of Milan; University of Essex - Institute for Social and Economic Research (ISER); Institute for the Study of Labor (IZA)

Carlo Dell'Aringa

Catholic University of the Sacred Heart of Milan

Marco Leonardi

Università degli Studi di Milano; IZA Institute of Labor Economics

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Date Written: July 21, 2011

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. We find 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 favor of permanent ones and reduced capital intensity, generating productivity losses. We estimate substitution elasticities across types of temporary contracts that are consistent with these interpretations.

Keywords: employment contracts, productivity, institutional changes

JEL Classification: J240, J410

Suggested Citation

Cappellari, Lorenzo and Dell'Aringa, Carlo and Leonardi, Marco, Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms (July 21, 2011). CESifo Working Paper Series No. 3520, Available at SSRN: https://ssrn.com/abstract=1891868 or http://dx.doi.org/10.2139/ssrn.1891868

Lorenzo Cappellari (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

University of Essex - Institute for Social and Economic Research (ISER)

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Carlo Dell'Aringa

Catholic University of the Sacred Heart of Milan ( email )

Istituto di Economia dell'Impresa e del Lavoro
20123 Milano
Italy

Marco Leonardi

Università degli Studi di Milano ( email )

14 Via Vetere
20122 Milano
Italy
+39 02 58100384 (Phone)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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