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R&D and Innovation Activities and the Use of External NumericalFlexibility

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  • William Addessi
  • Enrico Saltari
  • Riccardo Tilli

Abstract

We study the impact of R&D and innovation on the use of external numerical flexibility(ENF). R&D and innovation imply both a higher average and a higher volatile productivity.We investigate this ambiguous effect on the firm preference for using ENF in two steps. First,we use a simple model to show that a first-order stochastic dominance shift in the distributionfunction increases the probability of hiring permanent workers, while a second-order shift hasambiguous effects. Next, using a dataset based on a survey of Italian manufacturing firms,we run logit regressions to estimate the effect of R&D and innovation on the probability ofemploying a fixed-term or a TWA worker, finding a positive and always significant effect.We also consider internal and external R&D and different types of innovation. Results showthat the former has a positive effect while the latter depends on the type of innovation.

Suggested Citation

  • William Addessi & Enrico Saltari & Riccardo Tilli, 2011. "R&D and Innovation Activities and the Use of External NumericalFlexibility," Working Papers in Public Economics 150, Department of Economics and Law, Sapienza University of Roma.
    • Handle: RePEc:sap:wpaper:wp150
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    1. Addessi, William, 2014. "The productivity effect of permanent and temporary labor contracts in the Italian manufacturing sector," Economic Modelling, Elsevier, vol. 36(C), pages 666-672.

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    More about this item

    Keywords

    Flexible employment; Labor contracts; Research and Development; Innovation.;
    All these keywords.

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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