Date Added: Nov 2010
The aim of this paper is to analyze the evolution of productivity and how firm behavior and institutional conditions affects productivity. For that purpose, the authors use a longitudinal sample of Spanish manufacturing and services companies between 1983 and 2006, as well as OECD indicators on product market regulations. The productivity measurement is based on the control function approach, to overcome the endogeneity bias. Both for manufacturing and services firms, they have found that the share of temporary employment tends to reduce productivity, the effect being stronger for services firms, which make a more intensive use of this employment type. Their results also show that increases in competition lead to productivity improvements.