My thesis contributes to research on the consequences of labour market institutions for employment using an original Greek dataset I have constructed, the TERS. This survey gives a representative sample of micro-enterprises as well as small and medium enterprises. I investigate whether firms use temporary (and family) employment as "escape" routes from mandated wage floors (corporate collective wage agreements) and working conditions floors (employment protection legislation (EPL) monitored by the Labour Inspectorate). My basic hypothesis is thus that temporary and family work are forms of insurance for the poorer firms which cannot cope with EPL coupled with wage floors. I find significant wage floor effects, in particular, where firms have many workers at the minimum (or below it - in the case of "grey" market firms), they are more likely to employ temporary workers. The implication is that where firms have many workers on the minimum they are likely to worry about the possibility of a rise in the minimum, and hence will employ on a more temporary basis. Wage floors thus matter.
I also find significant EPL effects. In particular, firms whose managers believe that temps have low EPL are more likely to employ temps, ceteris paribus. My result thus shows that an advantage of employing temps is quite simply their low EPL. My findings for family worker employment are similarly confirmatory. Workplaces in the "grey" category, paying low wages probably below nationally agreed rates, are much more likely to employ a high percentage of family workers, other things equal-they are easy to layoff, and less likely to complain about low wages. The policy implication of my research is therefore that Greece's wages and working conditions floors indeed appear both to promote precarious temporary employment, and also small-scale family business, which is not the way to grow and prosper.
