Productivity, wages and profits among Belgian firms: do fixed-term contracts matter?

Abstract

Purpose

The purpose of this paper is to estimate the impact of fixed-term contracts (FTCs) on labour productivity, wages (i.e. labour cost), and productivity-wage gaps (i.e. profits).

Design/methodology/approach

The authors apply dynamic panel data techniques to detailed Belgian linked employer-employee panel data covering the period 1999-2006.

Findings

Results indicate that FTCs exert stronger positive effects on productivity than on wages and (accordingly) that the use of FTCs increases firms’ profitability.

Originality/value

This paper is one of the first to examine the FTC-productivity-wage nexus while addressing three important methodological issues related to the state dependency of the three explained variables, to firm time-invariant heterogeneity, and to the endogeneity of FTCs.

Citation

Garnero, A., Giuliano, R., Mahy, B. and Rycx, F. (2016), "Productivity, wages and profits among Belgian firms: do fixed-term contracts matter?", International Journal of Manpower, Vol. 37 No. 2, pp. 303-322. https://doi.org/10.1108/IJM-12-2014-0263