nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒10‒25
twenty-two papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Gradual Retirement, Financial Incentives, and Labour Supply of Older Workers: Evidence from a Stated Preference Analysis By Elsayed, Ahmed; de Grip, Andries; Fouarge, Didier; Montizaan, Raymond
  2. Broadband Diffusion and Firm Performance in Rural Areas: Quasi-Experimental Evidence By Giulia Canzian; Samuele Poy; Simone Schüller
  3. Misallocation and Total Factor Productivity in Italy: Evidence from Firm-Level Data By Sara Calligaris
  4. Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market? By Christian A. L. Hilber; Teemu Lyytikäinen
  5. Perceived Threat, Contact and Attitudes towards the Integration of Immigrants. Evidence from Luxembourg By CALLENS Marie-Sophie; MEULEMAN Bart; VALENTOVA Marie
  6. Human Resources and Innovation: Total Factor Productivity and Foreign Human Capital By Fassio, Claudio; Kalantaryan, Sona; Venturini, Alessandra
  7. European carbon market : lessons on the impact of a market stability reserve using the Zephyr model By Raphaël Trotignon; Pierre-André Jouvet; Boris Solier; Simon Quemin; Jérémy Elbeze
  8. The economic crisis and death by suicide in Spain: Empirical evidence based on a data panel and the quantification of losses in labour productivity. By Berta Rivera; Bruno Casal; Luis Currais
  9. Performance Pay and Applicant Screening By Uwe Jirjahn; Jens Mohrenweiser
  10. Hospital trusts productivity in the English NHS: uncovering possible drivers of productivity variations By Maria Jose Aragon Aragon; Adriana Castelli; James Gaughan
  11. The Impact of Part-Time Work on Firm Total Factor Productivity: Evidence from Italy By Francesco Devicienti; Elena Grinza; Davide Vannoni
  12. Estimating the marginal rate of substitution between wage and employment protection By Fabio Berton; Matteo Migheli
  13. Self-Selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics By George J. Borjas; Ilpo Kauppinen; Panu Poutvaara
  14. The 2011 Pension Reform in Italy and its Effects on Current and Future Retirees By Flavia Coda Moscarola; Margherita Borella
  15. Employment Effect of Innovation By D'Artis Kancs; Boriss Siliverstovs
  16. The UK Productivity Puzzle 2008-2013: Evidence From British Businesses By Rebecca Riley; Chiara Rosazza-Bondibene
  17. Estimating the Impact of Wind Generation in the UK By Lisa MH Hall; Alastair Buckley; Jose Mawyin
  18. R&D Spillovers and Employment: A Micro-econometric Analysis By Aldieri, Luigi; Garofalo, Antonio; Vinci, Concetto Paolo
  19. Female Migration and Native Marital Stability: Insights from Italy By Vignoli, Daniele; Venturini, Alessandra; Pirani, Elena
  20. Sources of the Union Wage Gap: Results from High-Dimensional Fixed Effects Regression Models By John T. Addison; Pedro Portugal; Hugo Vilares
  21. Offshoring and skill-upgrading in French manufacturing: A Heckscher-Ohlin-Melitz view By Juan Carluccio; Alejandro Cuñat; Harald Fadinger; Christian Fons-Rosen
  22. Temporary Employment, Demand Volatility and Unions: Firm-Level Evidence By Devicienti, Francesco; Naticchioni, Paolo; Ricci, Andrea

  1. By: Elsayed, Ahmed (IZA); de Grip, Andries (ROA, Maastricht University); Fouarge, Didier (ROA, Maastricht University); Montizaan, Raymond (ROA, Maastricht University)
    Abstract: Using data from a stated preferences experiment in the Netherlands, we find that replacing full-time pension schemes with schemes that offer gradual retirement opportunities induce workers to retire one year later on average. Total life-time labour supply, however, decreases with 3.4 months because the positive effect of delayed retirement on labour supply is cancelled out by the reduction in working hours before full retirement. The impact of gradual retirement schemes is, however, heterogeneous across groups of workers. Workers with non-routine job tasks retire at a later age when they can gradually retire. Financial incentives, either in terms of changing pension income or the price of leisure, also affect the expected retirement age, but the impact of these financial incentives does not differ with the possibility of gradual retirement. Finally, we find that gradual retirement is not a preferred option among workers as the large majority still prefers full retirement. This especially holds for workers with a lower wage and those with higher life expectancy.
    Keywords: gradual retirement, labour supply, financial incentives
    JEL: J14 J26
    Date: 2015–10
  2. By: Giulia Canzian; Samuele Poy; Simone Schüller
    Abstract: This article analyzes the causal impact of advanced broadband accessibility on firm performance. We exploit a unique local policy intervention of a staged broadband infrastructure installation across rural municipalities in the Province of Trento (Italy), generating a source of exogenous (spatial and temporal) variation in the provision of next-generation broadband technology (ADSL2+). Employing a difference-in-differences strategy and using longitudinal firm-level data on annual balance sheet information of corporate enterprises, we show that ADSL2+ availability is associated with a significant increase in annual sales turnover of about 40 percent and an increase in value added of roughly 25 percent over the period of two years. The positive effect is found to be rather stable for different lengths of treatment exposure and across industrial sectors. However, no significant effects are found with respect to number of employees. Placebo estimations support a causal interpretation of our results. Overall, established corporate enterprises in ‘underserved’ rural and remote areas appear to profit considerably from enhanced broadband delivery programs in terms of economic performance.
    Keywords: broadband internet, firm performance, quasi experiment, regional development
    JEL: O33 J24 L24 L26
    Date: 2015–10
  3. By: Sara Calligaris (University of Rome \Tor Vergata" & EIEF)
    Abstract: Over the last two decades, total factor productivity (TFP) in Italy decreased by 0.2% per year, while increasing on average in the Euro-area countries. This decline suggests the existence of large inefficiencies in the allocation of resources, making the Italian case particularly interesting and suitable in order to study the role of misallocation. In this paper, I quantify the within-industry misallocation of inputs in Italy over the period 1993{2011, by applying the Hsieh and Klenow's (2009) methodology. Using a micro-level longitudinal dataset of Italian manufacturing firms, I find that, in the hypothetical absence of distortions, aggregate TFP in manufacturing would be boosted by 58% in 1993, by 67% in 2006 and by 80% in 2011. This leads to a twofold conclusion: first, misallocation plays a crucial role in determining the inefficiency level of the Italian manufacturing sector; second, misallocation has increased over time. Given the magnitude of the results obtained and the policy implications related thereto, I take a step ahead by checking to what extent the degree of misallocation can be attributed to specific characteristics of the Italian firms: it emerges that misallocation is higher for firms located in the South and at low-technological intensity, as well as for small or young firms.
    Keywords: Allocative ineffciencies, productivity slowdown, Manufacturing, CERVED dataset.
    JEL: D24 L60 O47
    Date: 2015–10–14
  4. By: Christian A. L. Hilber; Teemu Lyytikäinen
    Abstract: We estimate the effect of the UK Stamp Duty Land Tax (SDLT) - a transfer tax on the purchase price of property or land - on different types of household mobility using micro data. Exploiting a discontinuity in the tax schedule, we isolate the impact of the tax from other determinants of mobility. We compare homeowners with self-assessed house values on either sides of a cut-off value where the tax rate jumps from 1 to 3 percent. We find that a higher SDLT has a strong negative impact on housing-related and short distance moves but does not adversely affect job-induced or long distance mobility. Overall, our results suggest that transfer taxes may mainly distort housing rather than labor markets.
    Keywords: Transfer taxes, stamp duty, transaction costs, homeownership, household mobility
    JEL: D23 H21 H27 J61 R21 R31 R38
    Date: 2015–10
  5. By: CALLENS Marie-Sophie; MEULEMAN Bart; VALENTOVA Marie
    Abstract: This paper examines the relation between immigration-related threat perceptions and the attitudes towards the integration (i.e. assimilation and multiculturalism) of immigrants by natives. Additionally it explores how that relationship interplays with intense contact with foreigners. The analysis is performed on a sample of natives in Luxembourg ? the country with the highest proportion of immigrants in Europe. The European Value Study from 2008 for Luxembourg and Structural Equation Modeling (SEM) is used to conduct the analyses. The outcomes of our analyses reveal that feelings of threat are associated with less support for multicultural attitudes, whereas the opposite can be found with respect to support for assimilation attitudes. Furthermore, it was found that more intense contact with immigrant friends is negatively correlated with threat perceptions and support for assimilation and positively correlated with support for multicultural attitudes. Lastly, more contact with immigrants is also directly related to integration preferences.
    Keywords: intergroup relations; assimilation; multiculturalism; perceived threat; contact; Luxembourg
    JEL: Z19
    Date: 2015–10
  6. By: Fassio, Claudio (Lund University); Kalantaryan, Sona (Migration Policy Centre); Venturini, Alessandra (University of Turin)
    Abstract: The objective of this paper is to analyse the role of migrants in innovation in Europe. We use Total Factor Productivity as a measure of innovation and focus on the three largest European countries – France, Germany and the United Kingdom – in the years 1994-2007. Unlike previous research, which mainly employs a regional approach, we analyse the link between migration and innovation at the sectoral level. This allows us to measure the direct contribution of migrants in the sector in which they are actually employed. Moreover, it allows a distinction between the real contribution of migrants to innovation from possible inter-sectoral complementarities, which might as well foster innovation. We control for the different components of human-capital, such as age, education and diversity of origin. To address the possible endogeneity of migration we draw on an instrumental variable strategy originally devised by Card (2001) and adapt it at the sector level. The results show that overall migrants are relevant in all sectors, but some important differences emerge across sectors: highly-educated migrants show a larger positive effect in the high-tech sectors, while middle- and low-educated ones are more relevant in manufacturing. The diversity of countries of origin contributes to innovation only in the services sectors, confirming that in empirical analyses at the regional or national level the diversity measure might capture the complementarity between sectors rather than the contribution of different national skills.
    Keywords: migration, innovation, highly skilled migrants, low skilled migrants
    JEL: F22 O31 O32
    Date: 2015–10
  7. By: Raphaël Trotignon; Pierre-André Jouvet; Boris Solier; Simon Quemin; Jérémy Elbeze
    Abstract: In January 2014, the European Commission proposed the introduction of a Market Stability Reserve (MSR) to improve the functioning of the European carbon emission trading scheme. This article is an attempt to enlighten the possible effects of such a reserve on the functioning of the EU ETS using the behavior-based simulation model Zephyr, specifically designed for representing imperfect inter-temporal compliance behavior in a simple framework. Our results suggest that the MSR can indeed raise the price in the short-medium term, reduce the number of allowances in circulation and foster earlier emission reductions. Nevertheless, it would do so at the expense of higher overall costs, because allowances are unlikely to be returned entirely to the market when needed, thus reinforcing the cap. The MSR also does not seem to have the desired dampening effect in case of external shocks. We conclude that although the MSR can help trigger early abatement and put Europe on a more ambitious abatement pathway over the long term, in the frame of our methodology, it seems unlikely that such a reserve make market participants and the public authority more able to deal with uncertainties in the future.
    Keywords: EU ETS, Market Stability Reserve (MSR), Simulation model, Governance
    JEL: Q58 P48
    Date: 2015
  8. By: Berta Rivera; Bruno Casal; Luis Currais
    Abstract: In 2013, the suicide rate in Spain went up by more than 9% with respect to the previous year. Suicide thus became the first cause of death between the ages of 15 and 44. This increase could be related to the serious economic recession that Spain has been experiencing in recent years. In this study, the panel data technique used demographic-type variables and those related to the economic cycle. We also used the suicide rates for the Spanish regions in the period between 2002 and 2013. Moreover, there is a lack of evidence to help assess to what extent these suicides have a social cost in terms of losses in human capital. Consequently, an estimate is made of the losses in labour productivity owing to these suicides. The results provide a strong indication that a decrease in economic growth and an increase in unemployment negatively affect suicide rates. Due to suicide, 37,250 potential years of working life were lost in 2012. This has an estimated cost of over 534 million Euros. The economic crisis endured by Spain in recent years has played a role in the higher suicide rates one can observe from the data in official statistics. From a social perspective, suicide is a public health problem with far-reaching consequences.
    Keywords: Suicide rates; economic crisis; unemployment; lost labour productivity, Spain.
    JEL: I18 I31 H75
    Date: 2015–10
  9. By: Uwe Jirjahn; Jens Mohrenweiser
    Abstract: Using German establishment data, we show that the relationship between performance pay and intensity of applicant screening depends on the nature of production. In establishments with increased multitasking, performance pay is associated with a greater intensity of applicant screening. In establishments without increased multitasking, it is associated with a reduced intensity. The findings fit the hypothesis that performance pay induces a positive self-sorting of employees if jobs are less multifaceted. In this case, employers using performance pay need no intense applicant screening to ensure a high quality of matches between workers and jobs. However, if jobs are more multifaceted, performance pay can entail problems of adverse self-sorting. In order to mitigate or overcome these problems, employers tying pay to performance screen applicants more intensely.
    Keywords: Performance pay, multitasking, self-sorting, applicant screening, non-managerial employees, managerial employees
    JEL: J33 J60 M51 M52
    Date: 2015
  10. By: Maria Jose Aragon Aragon (Centre for Health Economics, University of York, UK.); Adriana Castelli (Centre for Health Economics, University of York, UK); James Gaughan (Centre for Health Economics, University of York, UK.)
    Abstract: In 2009, the NHS Chief Executive warned that a potential funding gap of £20 billion should be met by extensive efficiency savings by March 2015. Our study investigates possible drivers of differential Trust performance (productivity) for the years 2010/11-2012/13. Productivity is measured as Outputs/Inputs. We extend previous productivity work at Trust level by including a fuller range of care settings, including Inpatient, A&E and Community Care, in our output measure. Inputs include staff, equipment, and capital resources. We analyse variation in Total Factor and Labour Productivity with ordinary least squares regressions. Explanatory variables include efficiency in resource use measures, Trust and patient characteristics. We find productivity varies substantially across Trusts but is consistent across time. Larger Trusts are associated with lower productivity. Patient age groups treated is also found to be important. Foundation Trust status is associated with lower Total Factor Productivity, while treating more patients in their last year of life is surprisingly associated with higher Labour Productivity. Variation in productivity is persistent across years, and not fully explained by case-mix adjustment. A lack of convergence in productivity may indicate outstanding scope to improve Trust productivity based on mimicking the practises of the most productive providers.
    Keywords: Hospital, productivity indices, productivity variation
    Date: 2015–10
  11. By: Francesco Devicienti (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Elena Grinza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: In this paper, we explore the impact of part-time work on firm productivity. Using a large panel data set of Italian corporations’ balance sheets for the period 2000-2010, we first estimate the total factor productivity (TFP) of each firm for each year. We use different approaches aimed at solving input simultaneity, including a version of Ackerberg et al.’s (2006) control function approach, which accounts for firm fixed effects. We then match the TFP estimates with rich information on the firms’ use of part-time work obtained from survey data and estimate the impact of part-time work on TFP at the firm level. We find that an increase of 1 standard deviation in the part-time share reduces TFP by 2.03%. The results suggest that this harmful effect stems from horizontal rather than vertical part-time arrangements. We also find that firms declaring that they use part-time work to accommodate workers’ requests suffer the most. Moreover, we show that the so-called ‘flexible’ and ‘elastic’ clauses are successful in reducing the negative impact associated with part-time work.
    Keywords: Part-time work, Horizontal and vertical part-time contracts, Flexible and elastic clauses, Firm total factor productivity (TFP), Semiparametric estimation methods.
    JEL: L23 L25 J23
    Date: 2015–10
  12. By: Fabio Berton; Matteo Migheli
    Abstract: Empirical evidence supports the hypothesis that workers have a strong preference for job security. Building on this, the empirical research focused so far on the analysis of the “port-of-entry hypothesis” – namely on testing whether temporary jobs may act as a springboard towards standard employment relationships – underexploring the issue of what would make workers indifferent between the two options. This is the aim of the present paper. Using a dedicated survey on a random sample of workers from the Italian public employment service, we find that: i) workers actually require a monetary compensation to trade a non-standard job for a standard one; ii) moreover, they display lexicographic preferences over contracts, inasmuch as when they have to compare an open-ended contract to a freelance contract (chosen as the epitome of precariousness in Italy), the compensation they ask for does not depend on contract duration; on the opposite, when they compare open-ended jobs to fixed-term jobs (where only expected duration actually matters) the required compensation does not depend on the type of contract, but only on its planned duration; iii) the estimated MRS between wage and contract duration is 257 more Euros per month to accept a one-year shorter employment relationship.
    Keywords: temporary work, compensation, preferences, marginal rate of substitution
    JEL: D03 J33 J41
    Date: 2015
  13. By: George J. Borjas (Harvard Kennedy School); Ilpo Kauppinen (VATT Institute for Economic Research); Panu Poutvaara (University of Munich and Ifo Institute)
    Abstract: We show that the Roy model has more precise predictions about the self-selection of migrants than previously realized. The same conditions that have been shown to result in positive or negative selection in terms of expected earnings also imply a stochastic dominance relationship between the earnings distributions of migrants and non-migrants. We use the Danish full population administrative data to test the predictions. We find strong evidence of positive self-selection of emigrants in terms of pre-emigration earnings: the income distribution for the migrants almost stochastically dominates the distribution for the non-migrants. This result is not driven by immigration policies in destination countries. Decomposing the self-selection in total earnings into self-selection in observable characteristics and self-selection in unobservable characteristics reveals that unobserved abilities play the dominant role.
    Keywords: International Migration, Roy model, Self selection
    JEL: F22 J61
    Date: 2015–10
  14. By: Flavia Coda Moscarola (University of Turin and CeRP-Collegio Carlo Alberto); Margherita Borella (University of Turin and CeRP-Collegio Carlo Alberto)
    Abstract: TWe analyse the effects of the pension reform of 2011 on individuals’ retirement age, adequacy and distribution of the benefits for various categories of Italian workers. The main findings are an increase in the average retirement age, generally raising over time, coupled with a sizeable increase in average replacement rates. However, the most affected group is represented by women employees born in 1955 and retiring in the period 2012-2021, who face an average increase in retirement age of four years, while benefiting from an increase in the average replacement rate of thirteen percentage points.
    Date: 2015–09
  15. By: D'Artis Kancs (European Commission – JRC - IPTS); Boriss Siliverstovs (KOF Swiss Economic Institute – ETH Zurich)
    Abstract: The present paper estimates and decomposes the employment effect of innovation by R&D intensity levels. Our microeconometric analysis is based on a large international panel data set from the EU Industrial R&D Investment Scoreboard. Employing flexible semi-parametric methods - the generalised propensity score - allows us to recover the full functional relationship between R&D investment and firm employment, and to address important econometric issues, which is not possible in the standard estimation approach used in the previous literature. Our results suggest that modest innovators do not create and may even destruct jobs by raising their R&D expenditures. Most of the jobs in the economy are created by innovation followers: increasing innovation by 1% may increase employment up to 0.7%. The job creation effect of innovation reaches its peak when R&D intensity is around 100% of the total capital expenditure, after which the positive employment effect declines and becomes statistically insignificant. Innovation leaders do not create jobs by further increasing their R&D expenditures, which are already very high.
    Keywords: Innovation, R&D investment, causal inference, semi-parametric, employment, job creation, GPS
    JEL: C14 C21 F23 J20 J23 O30 O32 O33
    Date: 2015–07
  16. By: Rebecca Riley; Chiara Rosazza-Bondibene
    Abstract: In many larger advanced economies labour productivity growth slowed sharply and remained subdued for years after the credit crisis of 2007/08. Nowhere was this more obvious than in the UK. We examine the dynamics of productivity among British businesses that lie behind this stagnation. The most striking feature is the widespread weakness in total factor productivity within firms, pointing to the importance of a common factor in explaining productivity weakness. In addition, we find that the positive correlation between surviving firms' employment growth and their relative productivity ranking broke down after 2007/08, as would be expected if an adverse credit supply shock had caused inefficiencies in resource allocation across firms. Indeed, during the immediate recession years 2008/09, this shift was most apparent in sectors with many small and bank dependent businesses. But subsequently, while the contribution of external reallocation to aggregate productivity growth in 2010/13 was smaller than in previous years, this was not obviously associated with sectoral bank dependence. We illustrate the sensitivity of these findings to the choice of decomposition method.
    Date: 2015–05
  17. By: Lisa MH Hall; Alastair Buckley; Jose Mawyin
    Abstract: This paper studies the impact of wind generation on market prices and system costs in the UK between 2013 and 2014. The wider effects and implications of wind generation is of direct relevance and importance to policy makers, as well as the system operator and market traders. We compare electricity generation from Coal, Gas and wind, on both the wholesale and imbalance market. We calculate the system cost of wind generation (government subsidies and curtailment costs) and the total energy costs. For the first time in the UK, we calculate the Merit Order Effect on spot price due to the wind component and show a 1.32\% price decrease for every percentage point of wind generation (compared to the "zero-wind" price). The net result of total costs and price savings is roughly zero (slight positive gain).
    Date: 2015–10
  18. By: Aldieri, Luigi; Garofalo, Antonio; Vinci, Concetto Paolo
    Abstract: In this paper we analyze the relationship between R&D activity, spillovers and employment at the firm level. A reduced form labour demand equation is estimated. R&D expenditures can account for both product and process innovation. The analysis is based upon a new dataset composed of 879 worldwide R&D-intensive manufacturing firms whose information has been collected for the period 2002-2010. We use data from all EU R&D investment scoreboards editions issued every year until 2011 by the JRC-IPTS (scoreboards). The main contribution to the existing literature is to investigate also the impact of outside R&D activity on own employment level. In particular, the paper investigates the role of R&D spillovers within the pillars of the Triad: United States, Japan and European economic area, but it goes beyond the previous studies by considering more opportune spillover components. Indeed, the potential stock of spillovers is dissociated into four components: the national stock, the international stock, the intra-industry stock and finally the inter-industry one. In this way, we will be able to appreciate to what extent geographical and cultural contiguity matters, by using an updated sample relative to large worldwide firms. The empirical results suggest a significant impact of R&D spillover effects on firms’ employment but the results are quite differentiated according to the spillover stock type and this may represent a relevant source of policy implications.
    Keywords: Panel Data Models, R&D Spillovers, Employment
    JEL: J20 O33
    Date: 2015–10–16
  19. By: Vignoli, Daniele; Venturini, Alessandra; Pirani, Elena (University of Turin)
    Abstract: In this paper, we argue that the size and the composition of the female migrant population in a given area can affect the marital stability of natives. We take Italy as a case-study and we offer discrete-time event history models predicting marital disruption on data from the nationally–representative 2009 Family and Social Subjects survey. We found that the increasing presence of first mover migrant women (coming from Latin America and Eastern Europe) is associated with higher separation risks among natives, especially for couples with lower human capital. Our findings add to our understanding of family formation and dissolution dynamics in recent immigration countries.
    Date: 2015–10
  20. By: John T. Addison; Pedro Portugal; Hugo Vilares
    Abstract: We estimate the impact of union density on wages using matched employer-employee contract data for Portugal. We extend omitted variable bias decomposition procedure of Gelbach (2016) to obtain the contribution of worker, firm, and job-title heterogeneity to the union wage premium. The principal result is the dominance of the allocation or workers among firms with different wage policies. The unobserved skills of union workers have a modest impact on wages; unions do not place their members into higher job-titles along the job career hierarchy; the wage cushion enables firms to partially undo the bargained wage; and, while fringes matter, matching does not.
    JEL: J31 J33 J41 J51 J52
    Date: 2015
  21. By: Juan Carluccio; Alejandro Cuñat; Harald Fadinger; Christian Fons-Rosen
    Abstract: We present a factor-proportions trade model in which heterogeneous firms can offshore intermediate inputs subject to fixed offshoring costs. In the skill-abundant country, high- productivity firms offshore a larger range of labor-intensive inputs to the labor-abundant countries than low-productivity firms. Differently from the traditional versions of factor- proportions trade theory, Heckscher-Ohlin forces operate at the within-industry level, leading to endogenous variation in skill intensity across firms that is positively correlated with firm productivity. Using French firm-level data for the years 1996 to 2007, we provide empirical support for the factor proportions channel through which offshoring to labor-abundant countries affects the firm-level skill intensities of French manufacturers.
    Keywords: offshoring, heterogeneous firms, firm-level factor intensities, Heckscher-Ohlin
    JEL: F11 F12 F14
    Date: 2015–09
  22. By: Devicienti, Francesco (University of Turin); Naticchioni, Paolo (University of Rome 3); Ricci, Andrea (ISFOL)
    Abstract: This paper investigates the effect of workplace unionization and product market volatility on firms' propensity to use temporary employment. Using Italian firm level data, we show that unionization and volatility have a positive impact on the share of temporary contracts. However, as volatility increases the union effect becomes negative, suggesting that in a highly volatile economic environment unions may be concerned about the weakening of their bargaining power associated with an extensive use of temporary workers. Furthermore, these effects are at work only for the use of non-training temporary contracts, while training temporary contracts are not affected by unions, volatility and their interplay. We argue that this occurs because non-training temporary contracts can be used by firms as a buffer stock to cope with uncertainty and by unions to protect insiders, while training temporary contracts are more likely to be used as a screening device for future permanent positions.
    Keywords: product demand volatility, training, temporary workers, unions, firms
    JEL: J51 J23 J24
    Date: 2015–10

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