Are temporary hires good or bad for innovation? The Italian evidence

Stefano Dughera, Francesco Quatraro, Andrea Ricci and Claudia Vittori

Economics of Innovation and New Technology, 2024, vol. 33, issue 8, 1121-1144

Abstract: This paper investigates the relationship between temporary workers and innovation. We model a firm’s choice concerning: (i) the mix of temporary and permanent workers; (ii) the optimal level of training intensity that firms choose by best-responding to the worker’s human capital investments. Results suggest that the innovation-enhancing combination of temporary and permanent workers exists and is unique. Using micro-data on Italian firms, we then find that the relationship between the firm-level share of temporary workers and innovation has indeed an inverted U form, in line with our theoretical expectations. This suggests that studies assuming a linear association may oversimplify the complex relationship between non-standard labor and innovation.

Date: 2024
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DOI: 10.1080/10438599.2023.2287443

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