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Why do flexible work arrangements exist?

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  • Datta, Nikhil

Abstract

This paper studies flexible work arrangements, with a focus on zero-hours contracts (ZHCs). Leveraging a unique dataset from a large UK firm in the low-pay sector, it provides novel descriptives on ZHC workers, as well as evidence on demand and supply side mechanisms for the use of ZHCs. The results show that ZHC workers experience significantly higher turnover rates and lower wages than permanent employees, and large heterogeneity in hours and earnings volatility. Causal evidence on the firm demand-side demonstrates that ZHCs help firms manage production and demand shocks. On the supply-side, ZHC roles attract 25% more applicants than comparable permanent jobs. ZHC roles are concentrated among specific demographics, and vacancy applicant and firm offer data demonstrates this is supply driven. Few ZHC workers apply for permanent positions and their decision to apply for a permanent position is wage insensitive. In contrast, permanent workers exhibit ZHC-wage elasticities that are an order of magnitude larger than those of their ZHC counterparts.

Suggested Citation

  • Datta, Nikhil, 2024. "Why do flexible work arrangements exist?," LSE Research Online Documents on Economics 126748, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:126748
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    File URL: http://eprints.lse.ac.uk/126748/
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    References listed on IDEAS

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    1. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    2. Elena Grinza & François Rycx, 2020. "The Impact of Sickness Absenteeism on Firm Productivity: New Evidence from Belgian Matched Employer–Employee Panel Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 150-194, January.
    3. Abi Adams-Prassl & Tom Waters & Maria Balgova & Matthias Qian, 2023. "Firm concentration & job design: the case of schedule flexible work arrangements," IFS Working Papers W23/14, Institute for Fiscal Studies.
    4. Haoran He & David Neumark & Qian Weng, 2021. "Do Workers Value Flexible Jobs? A Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 39(3), pages 709-738.
    5. Nikhil Datta, 2023. "The measure of monopsony: the labour supply elasticity to the firm and its constituents," CEP Discussion Papers dp1930, Centre for Economic Performance, LSE.
    6. Datta, Nikhil, 2019. "Willing to pay for security: a discrete choice experiment to analyse labour supply preferences," LSE Research Online Documents on Economics 103390, London School of Economics and Political Science, LSE Library.
    7. Datta, Nikhil, 2023. "The measure of monopsony: the labour supply elasticity to the firm and its constituents," LSE Research Online Documents on Economics 121312, London School of Economics and Political Science, LSE Library.
    8. Alexandre Mas & Amanda Pallais, 2020. "Alternative Work Arrangements," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 631-658, August.
    9. Nikhil Datta, 2019. "Willing to pay for security: a discrete choice experiment to analyse labour supply preferences," CEP Discussion Papers dp1632, Centre for Economic Performance, LSE.
    10. Abi Adams-Prassl & Maria Balgova & Matthias Qian & Tom Waters, 2023. "Firm Concentration & Job Design: The Case of Schedule Flexible Work Arrangements," Economics Series Working Papers 1002, University of Oxford, Department of Economics.
    11. Maria Koumenta & Mark Williams, 2019. "An anatomy of zero‐hour contracts in the UK," Industrial Relations Journal, Wiley Blackwell, vol. 50(1), pages 20-40, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    technological change; employment; zero-hours contracts; gig economy; jobs;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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