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The paper aims to introduce the special issue of IJM, a collection of papers that were originally presented at the 88^th Applied Econometrics Association Conference.

Provides a general outline of the focus of the issue.

The conference papers aimed to stimulate discussion on the “Econometrics of labour demand”. They focus on aspects of HRM, including incentive pay schemes, job satisfaction, promotion and social concerns.

The paper outlines the development of personnel economics over the past 25 years and introduces the papers in the special issue of IJM.

The purpose of this paper is to introduce this special issue on work organization, performance and health.

The authors provide a general review of the literature and describe the main findings of the papers appearing in this special issue.

This issue provides new evidence regarding the impact of work organization (essentially defined in terms of payment methods, teamwork, workforce age structure and labour contracts) on performance (measured through employment, productivity and sickness absenteeism indicators). It also sheds more light on the determinants of workers’ health by gender, with particular attention to working conditions and mobbing.

The papers collected in this special issue provide some fine examples of recent work at the crossroads of health and personnel economics.

To ease adjustments in the labour market, many countries have softened their legislation since the 1970s by introducing flexible labour contracts or by making their use easier. The purpose of this paper is to document labour management of temporary contracts during the last 20 years in Belgium, compared to the situation in its neighbouring countries. The authors investigate the determinants of the use of flexible labour contracts and the consequences of their introduction on labour dynamics.

A dynamic Probit is considered to model the use of fixed term labour contracts (FTCs) and standard dynamic labour demand equations are used to test the impact of labour contracts on the labour adjustment at the firm level, using a panel of around 8,000 firms during the period 1998‐2005.

The results indicate that some firms follow labour management based on a core (indefinite term contracts – ITCs) and a peripheral component (FTCs) and manage temporary contracts on a “permanent” basis, from a long run perspective. Estimates also confirm a much faster temporary contracts employment adjustment, while ITCs adjustment does not depend on whether firms employ FTCs. ITCs short‐term employment elasticity with respect to wages suggests that workers protection against redundancies is strengthened when firms manage work organisation with both types of contracts. In contrast to ITCs, FTCs are used to meet unexpected demand shocks.

This paper contributes to the growing literature on the impact of the introduction of new flexible contracts on the labour demand at the firm level.

This paper aims to estimate whether human resource (HR) practices influence labour demand dynamics behaviour.

Groups practices in terms of employees satisfaction and work organisation, financial incentives and individual's career perspectives, and explains how they may influence labour productivity and cost. Considering five HR variables, estimates two specifications of labour demand dynamics, under production constrained by demand or monopolistic competition regimes. Applies the two‐step GMM estimator proposed by Blundell and Bond to a balanced panel of 452 Belgian firms observed during the period 1998‐2002.

In the complete monopolistic competition specification, estimates a positive one lag relation explaining labour demand by average training hours combined with an indicator of well‐being of workers, the fact that they are engaged in long term contracts and stay in firms. Some evidence therefore seems to show that some combined HR practices can improve labour demand.

Provides information on whether HR practices influence labour demand dynamics in a Belgian context.

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).

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

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

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.

The purpose of this paper is to examine the impact of wage dispersion on sickness absenteeism observed in Belgian firms.

The authors use detailed linked employer-employee panel data for the period 1999-2006 that allow the authors to compute a conditional wage dispersion indicator following the Winter-Ebmer and Zweimüller (1999) methodology and to estimate the relationship between sickness absenteeism and wage dispersion while controlling for time-invariant workplace characteristics.

The authors find a positive and hump-shaped relationship between intra-firm wage dispersion and sickness absenteeism, the turning point of this relation being extremely high. In addition, the magnitude of the influence of wage dispersion on sickness absenteeism is found to be stronger in firms employing a larger share of blue-collar workers.

The results could therefore suggest that wage dispersion, suggestive of larger pay-for-performance mechanisms, decreases worker satisfaction and the workplace climate in general. Only a minority of workers, who are less sensitive to equity and cohesion considerations, would be less absent as pay-for-performance increases.

While numerous approaches analyse the link between wage dispersion and firm productivity, very few studies we are aware of are devoted to the relationship between wage dispersion and sickness absenteeism. Yet, the outcomes in terms of productivity and sickness absenteeism may be different. Furthermore, the influence of wage dispersion on sickness absenteeism does not seem unambiguous from a theoretical point of view. To the authors knowledge, it is the first time that this relation is analysed with Belgian data.

The purpose of this paper is to test the relationship between gross domestic product (GDP) and agency work.

The paper develops a theoretical model for the time interdependence of GDP, agency work and regular employment and tested model predictions using a VAR model.

Results show that on the macro level temporary agency work leads GDP development. Temporary agency work is an excellent instrument for employers to adjust the size of their workforce to fluctuations in product demand. Temporary work agencies, however, have a tough job finding qualified personnel in tight labour markets because workers generally prefer the security of a permanent contract. It is shown in this paper that, as a result of these two countervailing forces, the number of hours worked through temporary work agencies precedes GDP development. Agency work increases in the last phase of a recession after regular workers have been dismissed. It expands further, in line with GDP, when the trough is passed until agency worker's labour supply stagnates. This leads to a decrease in agency hours even before the business cycle reaches its peak. Then agency work declines further, in line with GDP, until regular workers are dismissed and the cycle start again.

Temporary work arrangements have become a key area of interest for firms, academics and policy makers. This paper shows how the use of these work arrangement fluctuates over time. Also, this paper shows that agency work can be used in predicting future GDP development.

The purpose of this paper is to evaluate empirically the relationship between workforce age, wage and productivity at the firm level.

Panel data techniques are applied to Belgian data on private sector workers and firms during 1999‐2006.

Results (robust to various potential econometric issues, including unobserved firm heterogeneity, endogeneity and state dependence) suggest that older workers are significantly less productive than prime age and young workers. In contrast, the productivity of middle‐aged workers is not found to be significantly different compared to young workers. Findings further indicate that average hourly wages within firms increase significantly with workers’ age. Overall, this leads to the conclusion that young (older) workers appear to be “underpaid” (“overpaid”).

These findings contribute to the growing literature on how the workforce age structure affects productivity and wages.