The Finance Brown Bag Seminar is held by the Institute for Finance, Banking and Insurance (WU Vienna) and the Vienna Graduate School of Finance (VGSF). It serves as a presentation platform for PhD students, faculty members, and visitors. An overview of BBS on the website of the Institute for Finance, Banking and Insurance.
December 4th, 2018, 12:00-13:00, D4.0.136
Olga Kuzmina, New Economic School
Title: "Innovation and the Structure of Employment Contracts"
We exploit the appealing institutional setting of the Spanish labor market to show that the use of more flexible (shorter and cheaper-to-terminate) contracts with labor increases firm's innovation. We distinguish between different types of innovation (frontier vs adoptive, domestic vs imported technology) to shed light on the mechanism behind the effect. The evidence is consistent with both flexible labor contracts reducing financial constraints of the firm, but at the expense of lower human capital investment. We build the identification strategy on the exogenous inter-temporal and cross-regional variation in government programs, which aimed at an increase in worker job security, and discouraged firms from using the more flexible ("fixed-term") contracts. This setting, akin to a natural experiment, allows us to identify the effects of interest in the instrumental variables framework, also controlling for unobserved heterogeneity.