Flexible Labor and Innovation Performance: Evidence from Longitudinal Firm-Level Data
33 Pages Posted: 9 Feb 2010
Date Written: 21 2010 1,
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 inno¬va¬tive new products (“first on the market”). High functional flexibility in “insider-outsider” la¬bor markets enhances a firm’s new product sales, as do training efforts and highly edu¬ca¬¬ted personnel. We find weak evidence that larger and older firms have higher new pro¬duct sales than do younger and smaller firms. Our findings should be food for thought to eco-nomists making unqualified pleas for the deregulation of labor markets.
Keywords: J5, M5, O15, O31, innovation performance, new product sales, numerical flexibility, OSA longitudinal dataset, SMEs
JEL Classification: M13, O32, M, O31
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