The effects of temporary workers on firms’ financial performance: evidence from China

ABSTRACT

This study investigates the relationship between temporary employment and firms’ financial performance in Chinese manufacturing firms. Using two waves of large social survey data, the empirical results reveal (1) the proportion of temporary workers has a significant inverted-U-shaped relationship with a firm’s financial performance, (2) a firm’s human resource treatment disparity between permanent and temporary workers (HR treatment disparity) strengthens the negative relationship between temporary employment and performance, and (3) the innovation-oriented firm strategy in conjunction with a higher proportion of temporary workers is associated with poorer firm performance.

KEYWORDS:

• Temporary workers
• financial performance
• human resource treatment disparity
• innovation-oriented strategy

JEL CLASSIFICATION:

• M51
• M52
• M54

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ We also use profit per employee as the dependent variable to conduct the robustness check; the results are consistent with those reported in Table 2.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China (No. 71872117).