Job security and labor productivity:
An inverse U-shaped relationship
Purpose – to investigate the relationship between job security and labor productivity among 45,506 companies from the Czech Republic, Slovakia, Croatia, Slovenia, and Latvia.
Design/Method/Approach. This article uses linear regression analysis based on data from the period of 2013-2017.
Findings. The study indicates an inverse U-shaped relationship between employment volatility, as measured by the coefficient of variation, and labor productivity. Labor productivity increases along with employment fluctuation up to a certain point; however, when employees feel insecure, their labor productivity deteriorates. Surprisingly, for most companies, the relationship between employment fluctuation and labor productivity remains positive. Labor productivity gets affected positively by the security feeling rather than by guaranteeing the job position.
Originality/Value. The results are consistent within the subsamples of the five individual countries in the sample and robust to two alternative measures of fluctuation, the mean absolute deviation, and the studentized range.
Paper type – empirical.
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