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The effect of job insecurity on labour supply

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  • Jara Tamayo, Holguer Xavier
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    Abstract

    The aim of this paper is to analyse the efect of job insecurity on labour supply. We propose an extension of traditional discrete choice models of labour supply in order to allow for the introduction of non-pecuniary job attributes in the analysis. In our extended model, the choice alternatives are characterised by bundles of income, hours of work and job insecurity. We compare the predictive power and labour supply elasticities obtained with our model to those of a traditional model where only income and discrete hours choices characterise a job. The results show that once job insecurity is included in the discrete choice alternatives, the predictive power of the model improves signifïcantly. 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.

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    File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2013-16.pdf
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    Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2013-16.

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    Date of creation: 16 Sep 2013
    Publication status: published
    Handle: RePEc:ese:iserwp:2013-16
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    1. Colin P. Green & Gareth D. Leeves, 2013. "Job Security, Financial Security and Worker Well-being: New Evidence on the Effects of Flexible Employment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(2), pages 121-138, 05.
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    4. David Campbell & Alan Carruth & Andrew Dickerson & Francis Green, 2007. "Job insecurity and wages," Economic Journal, Royal Economic Society, vol. 117(518), pages 544-566, 03.
    5. Burgard, Sarah A. & Brand, Jennie E. & House, James S., 2009. "Perceived job insecurity and worker health in the United States," Social Science & Medicine, Elsevier, vol. 69(5), pages 777-785, September.
    6. Clark, Andrew E., 2001. "What really matters in a job? Hedonic measurement using quit data," Labour Economics, Elsevier, vol. 8(2), pages 223-242, May.
    7. Steinar StrØm & John K. Dagsvik, 2006. "Sectoral labour supply, choice restrictions and functional form," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 803-826.
    8. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, August.
    9. Arrufat, Jose Luis & Zabalza, Antonio, 1986. "Female Labor Supply with Taxation, Random Preferences, and Optimization Errors," Econometrica, Econometric Society, vol. 54(1), pages 47-63, January.
    10. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
    11. Dagsvik, John K, 1994. "Discrete and Continuous Choice, Max-Stable Processes, and Independence from Irrelevant Attributes," Econometrica, Econometric Society, vol. 62(5), pages 1179-1205, September.
    12. repec:zbw:rwirep:0418 is not listed on IDEAS
    13. Hausman, Jerry & Ruud, Paul, 1984. "Family Labor Supply with Taxes," American Economic Review, American Economic Association, vol. 74(2), pages 242-248, May.
    14. Kunze, Lars & Suppa, Nicolai, 2013. "Job Characteristics and Labour Supply," Ruhr Economic Papers 418, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
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