Employment Volatility and Labor Productivity of Czech Companies

Abstract

Multiple past authors found evidence of negative effects of job insecurity on labour productivity. However, it is not clear whether the relationship is purely linear, or it contains nonlinear components. Moreover, to the best of our knowledge, no study evaluated the relationship in the Czech Republic. In this paper, we investigate the relationship between fluctuation of employment and labour productivity among 13,546 Czech companies. Using the financial data from the period 2013-2017 extracted from the Bureau van Dijk’s Amadeus database and linear regression analysis, we find a significant inverse U-shaped relationship between firm-level employment volatility and labour productivity. This finding partly contradicts previous studies and suggest that job insecurity and labour productivity are first positively related and then negatively related. Possible reasons and implications are discussed.