Do Temporary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms

Juan Dolado and Rodolfo Stucchi

No 7055, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper evaluates the impact of the widespread use of fixed-term contracts in Spain on firms' TFP, via its effect on workers' effort. We propose a simple analytical framework showing that, under plausible conditions, workers' effort depends positively on their perception (for given level of effort) about firms' willingness to convert fixed-term contracts into permanent ones. We test this implication using manufacturing firm level data from 1991 to 2005 by means of nonparametric tests of stochastic dominance and parametric multivariate regression approaches. Our main findings are that high conversion rates increase firm's productivity while high shares of temporary contracts decrease it. Both effects are quantitatively relevant.

Keywords: Temporary workers; Workers' effort; Firms' tfp (search for similar items in EconPapers)
JEL-codes: C14 C52 D24 J24 Z (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-bec, nep-eec, nep-eff and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Working Paper: Do Temporary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms (2008)
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