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More flexibility for more innovation? Evidence from the Netherlands
[1]
- © AIAS
Labor market flexibility continues to be one of
economics, politics and society highly debated topic. In recent years,
the impact of increased labor market flexibility on research and
innovation has gained more and more attention. Previous studies have
shown, depending on the measurement of flexibility as well as on the
data that both positive and negative influences can be found. However,
the financial flexibility in terms of wage rigidities has hardly been
explored empirically. With the use of a unique dataset combining
comprehensive information from both employers and employees we can
accomplish variables not only to numerical and functional, but also to
financial wage flexibility. In a panel probit model, we show that the
influences of most of the indicators of wage flexibility are positive
and vary by type of innovation. While the variables of wage bargaining
has a higher impact on process innovations, information about specific
wage levels, however, affects in particular the development of new
products. The same applies to a separate consideration of wage
bargaining levels. Aspects of numerical and functional labor market
flexibility, in contrast, act negative on all types of innovation.
Thereby, part time employees affect particularly processes, while
flexible employment contracts have a stronger influence on product
innovations. It seems that new products depend more on employment
status and the resulting motivation of the employees.
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