Temporary Employment, Demand Volatility and Unions: Firm-Level Evidence

35 Pages Posted: 19 Oct 2015

See all articles by Francesco Devicienti

Francesco Devicienti

University of Turin - Collegio Carlo Alberto; University of Turin - Department of Economics and Financial Sciences G. Prato

Paolo Naticchioni

University of Rome I; University of Cassino

Andrea Ricci

ISFOL, Rome (Italy)

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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 Classification: J51, J23, J24

Suggested Citation

Devicienti, Francesco and Naticchioni, Paolo and Ricci, Andrea, Temporary Employment, Demand Volatility and Unions: Firm-Level Evidence. IZA Discussion Paper No. 9410. Available at SSRN: https://ssrn.com/abstract=2675447

Francesco Devicienti (Contact Author)

University of Turin - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy

Paolo Naticchioni

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

University of Cassino ( email )

Cassino
Italy

Andrea Ricci

ISFOL, Rome (Italy) ( email )

No Address Available

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