Our speaker will be

Olga Kuzmina

 (New Economic School).

She will give a talk on "Innovation and the Structure of Employment Contracts".

The talk will take place at 12:00-13:00 in seminar room D4.0.136.

Abstract: 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.