Resumen de Flexible labor and innovation in the Italian industrial sector

Franco Franceschini, Vincenzo Mariani

• We study how labor flexibility within firms affects innovation. Using data from the Bank of Italy and information on patent applications, we find that innovation falls when firms increase the share of temporary workers. The effect of interest is identified through policy changes that modified the relative cost of temporary employment. Reforms introduced since the end of the 1990s that have reduced cost and protection of temporary workers may have been a determinant of the low innovation of Italian firms.