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The Effect of Job Insecurity on Labour Supply

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  • H. Xavier Jara

    (University of Essex)

Abstract

The aim of this paper is to analyse the effect of job insecurity on labour supply. We propose a discrete choice model of labour supply, in which the choice alternatives are characterised by bundles of income, hours of work and job insecurity. The results show that job insecurity has a negative and significant effect on individuals’ utility. Moreover, once job insecurity is included in the discrete choice alternatives, the predictive power of the model improves significantly. Labour supply elasticities are significantly higher than those obtained with a traditional model and increase with the level of job insecurity. Finally, a decrease of job insecurity at work has a positive and significant effect on participation. Policies aimed at improving working conditions could, in this sense, be useful to create incentives in labour market.

Suggested Citation

  • H. Xavier Jara, 2015. "The Effect of Job Insecurity on Labour Supply," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 18(2), pages 187-204.
    • Handle: RePEc:ozl:journl:v:18:y:2015:i:2:p:187-204
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    References listed on IDEAS

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    More about this item

    Keywords

    Discrete choice; Labour supply; Job insecurity;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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