policymakers demonstrate

European Union Dual Labour Markets 79
2.6
TFP
2.4
Spain
2.2
France
2
1.8
1.6
Italy
United Kingdom
1.4
U.S.
1.2
1
Germany
0.8
1950 1960 1970 1980 1990 2000 2010
Figure 2.3 TFP in some OECD countries (Index 1950 = 1, Fernández-
Villaverde and Ohanian, 2015).
shorter, firms become more reluctant to invest in workers’ training because they
can benefit less from this investment in human capital.
By the same token, temporary workers may lack the right incentives to
improve on their job performance through exerting more effort and accumulating
better productive capabilities. Further, given that these skills are important
determinant of multifactor productivity, this mechanism may have played a relevant
role in explaining the unsatisfactory development of TFP growth in EU
countries with segmented labour markets, as depicted in Figure 2.3.
The empirical evidence about the impact of temporary work on labour market
outcomes shows that, in general, it could be beneficial in unified labour
markets (stepping stones) while it is unambiguously detrimental in dual labour
markets (dead ends). As mentioned above, this is especially the case when
wage bargaining is ruled by an insider-outsider model which prevents wages
to offset labour turnover costs. For example, Zijl et al. (2004) and Dolado et al.
(2015a) find that TC do not improve access to PC. Furthermore, they create
excessive wage pressure (see Bentolila and Dolado, 1994), lead to low firms’
training investments on workers (see Cabrales et al., 2014, OECD) and lead