Exuberant Proclivity toward Non-Standard Employment: Evidence from Linked Employer–Employee Data

Abstract

In most industrialized countries, temporary and non-standard forms of employment have become a pervasive feature of the labor market. At the firm level, however, their diffusion is less uniform than expected. While some firms exhibit high propensity to use non-standard labor, others make no use of it. The most conventional explanations (market uncertainty, production regimes, competitive pressure) fail to account for such heterogeneity. In this article, the authors develop an alternative explanation that links non-standard employment to the firm-specific availability of managerial resources: Whenever the latter are relatively scarce, firms make larger use of non-standard labor to reduce coordination and operating costs. Using a linked employer–employee panel of manufacturing firms from the Emilia-Romagna region (Italy), the authors provide empirical support for this explanation. The result is robust to different estimation strategies and controlling for alternative drivers of non-standard employment. This finding suggests that the use of non-standard labor is motivated by the firm’s needs to compensate for specific managerial scarcities.