Interlocking complementarities between job design and labour contracts

Abstract In this paper, we study the existence of interlocking complementarities between job design and labour contract at firm level. Using a formal model, show that firms face two organizational equilibria: one in which designs with high routine task intensity are matched large use non-standard contracts; other low combines small contracts. These exist because while contracts allow to adjust external shocks, they also provide little incentive invest firm-specific knowledge. We test prediction using linked-employer-employee data from Emilia-Romagna region. The evidence is consistent our theory: positively associated This result holds controlling for wide range contextual covariates it robust alternative estimation methods (OLS, panel IV).