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Do Firms Demand Temporary Workers When They Face Workload Fluctuation? Cross-Country Firm-Level Evidence

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  • Vanessa Dräger
  • Paul Marx

Abstract

The growth of temporary employment is one of the most important transformations of labor markets in the past decades. Theoretically, firms’ exposure to short-term workload fluctuations is a major determinant of employing temporary workers when employment protection for permanent workers is high. The authors investigate this relationship empirically with establishment-level data in a broad comparative framework. They create two novel data sets by merging 1) data on 18,500 European firms with 2) measures of labor-market institutions for 20 countries. Results show that fluctuations increase the probability of hiring temporary workers by 8 percentage points in countries with strict employment protection laws. No such effect is observed in countries with weaker employment protections. Results are robust to subgroups, subsamples, and alternative estimation strategies.

Suggested Citation

  • Vanessa Dräger & Paul Marx, 2017. "Do Firms Demand Temporary Workers When They Face Workload Fluctuation? Cross-Country Firm-Level Evidence," ILR Review, Cornell University, ILR School, vol. 70(4), pages 942-975, August.
    • Handle: RePEc:sae:ilrrev:v:70:y:2017:i:4:p:942-975
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    Cited by:

    1. Bassanini, Andrea & Caroli, Eve & Fontaine, François & Rebérioux, Antoine, 2021. "Escaping social pressure: Fixed-term contracts in multi-establishment firms," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 697-715.

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