Job security and labor productivity:

An inverse U-shaped relationship

  • Martin Machek University of Economics, Prague, Czech Republic
Keywords: employment volatility, job security, 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.


Download data is not yet available.

Author Biography

Martin Machek, University of Economics, Prague, Czech Republic

Faculty of Business Administration


Blau, P. M. (1964). Exchange and power in social life. New Brunswick, NJ: Transaction.
Cappelli, P. H., & Keller, J. R. (2013). A study of the extent and potential causes of alternative employment arrangements. ILR Review, 66(4), 874-901. doi: 10.1177/001979391306600406.
Chadwick, C., Hunter, L. W., & Walston, S. L. (2004). Effects of downsizing practices on the performance of hospitals. Strategic Management Journal, 25(5), 405-427. doi:10.1002/smj.383.
De Meulenaere, K., Boone, C., & Buyl, T. (2016). Unraveling the impact of workforce age diversity on labor productivity: The moderating role of firm size and job security. Journal of Organizational Behavior, 37(2), 193-212. doi:10.1002/job.2036.
Frenkel, S., & Orlitzky, M. (2005). Organizational trustworthiness and workplace labor productivity: Testing a new theory. Asia Pacific Journal of Human Resources, 43(1), 34-51. doi:10.1177/1038411105050306.
Galunic, D. C., & Anderson, E. (2000). From security to mobility: Generalized investments in human capital and agent commitment. Organization Science, 11(1), 1-20. doi:10.1287/orsc.
Ghoshal, S., Moran, P., & Bartlett, C. (1996). Employment security, employability and sustainable competitive advantage. Paper presented at the annual meeting of the Academy of Management, Cincinnati, OH.
Gutchess, J. F. (1985). Employment security and productivity? It can be done. National Productivity Review, 4(3), 275-286. doi:10.1002/npr.4040040307.
Guthrie, J. P. (2001). High-involvement work practices, turnover, and productivity: Evidence from New Zealand. Academy of Management Journal, 44(1), 180-190. doi:10.5465/3069345.
Haans, R. F., Pieters, C., & He, Z. L. (2016). Thinking about U: Theorizing and testing U‐and inverted U‐shaped relationships in strategy research. Strategic Management Journal, 37(7), 1177-1195. doi:10.1002/smj.2399.
Hancock, J. I., Allen, D. G., Bosco, F. A., McDaniel, K. R., & Pierce, C. A. (2013). Meta-analytic review of employee turnover as a predictor of firm performance. Journal of Management, 39(3), 573-603. doi:10.1177/0149206311424943.
Hodson, R. (2004). Organizational trustworthiness: Findings from the population of organizational ethnographies. Organization Science, 15(4), 432-445. doi:10.1287/orsc.1040.0077.
Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3), 635-672. doi:10.5465/256741.
Ichino, A., & Riphahn, R. T. (2005). The Effect of Employment Protection on Worker Effort: Absenteeism during and after Probation. Journal of the European Economic Association, 3(1), 120–143. doi:10.1162/1542476053295296
Iverson, R. D., & Zatzick, C. D. (2011). The effects of downsizing on labor productivity: The value of showing consideration for employees' morale and welfare in high‐performance work systems. Human Resource Management, 50(1), 29-44. doi:10.1002/hrm.20407.
Jackson, S. E., & Schuler, R. S. (1995). Understanding Human Resource Management in the Context of Organizations and their Environments. Annual Review of Psychology, 46(1), 237–264. doi:10.1146/
Katzell, R. A., Yankelovich, D., Fein, M., Ornati, O. A., & Nash, A. (1975). Improving productivity and job satisfaction. Organizational Dynamics, 4(1), 69-80. doi:10.1016/0090-2616(75)90006-6.
Kutner, M. H., Nachtsheim, C. J., & Neter, J. (2004). Applied Linear Regression Models (4th ed.). McGraw-Hill Irwin.
Leana, C. R., & Van Buren, H. J. (1999). Organizational social capital and employment practices. Academy of Management Review, 24(3), 538-555. doi:10.5465/amr.1999.2202136.
Leung, W. (2009). Job security and productivity: Evidence from academics. Doctoral dissertation. Berkley, CA: University of California, Berkley.
Lind, J. T., & Mehlum, H. (2010). With or without U? The appropriate test for a U‐shaped relationship. Oxford Bulletin of Economics and Statistics, 72(1), 109-118. doi:10.1111/j.1468-0084.2009.00569.x.
Lindbeck, A., & Snower, D. J. (1988). Job security, work incentives and unemployment. The Scandinavian Journal of Economics, 90(4), 453-474. doi:10.2307/3440047.
Noble, C. H. (2008). The influence of job security on field sales manager satisfaction: Exploring frontline tensions. Journal of Personal Selling & Sales Management, 28(3), 247-261. doi:10.2753/PSS0885-3134280303.
Obeng, I. K. E. (2017). Delaying Payments in the European Union: An Empirical Dynamic Panel Data Analysis 1. Ekonomický časopis, 65(10), 952-971.
Olsson, M. (2009). Employment protection and sickness absence. Labour Economics, 16(2), 208-214. doi:10.1016/j.labeco.2008.08.003.
Probst, T. M. (2003). Development and validation of the job security index and the job security satisfaction scale: A classical test theory and IRT approach. Journal of Occupational and Organizational Psychology, 76(4), 451-467. doi:10.1348/096317903322591587.
Rao, C. R. (1973). Linear Statistical Inference and Its Applications, 2nd ed. New York: John Wiley & Sons.
Sun, L. Y., Aryee, S., & Law, K. S. (2007). High-performance human resource practices, citizenship behavior, and organizational performance: A relational perspective. Academy of Management Journal, 50(3), 558-577. doi:10.5465/amj.2007.25525821.
Tepperová, J., & Helman, K. (2019). Relationship Between Employment and Effective Taxation of Labour on Enterprise Level in EU. Ekonomický časopis, 67(1), 52-68.
Tsui, A. S., Pearce, J. L., Porter, L. W., & Tripoli, A. M. (1997). Alternative approaches to the employee-organization relationship: Does investment in employees pay off? Academy of Management Journal, 40(5), 1089-1121. doi:10.5465/256928.
How to Cite
Machek, M. (2019). Job security and labor productivity:. European Journal of Management Issues, 27(3-4), 82-89.