Three Essays on Flexible Working Arrangements and Labour Market Outcomes

This thesis looks at the effects of flexible working arrangements on workers’ labour market outcomes. The particular type of flexible working arrangement analysed in this thesis is called “flexitime”. This is an arrangement which gives workers the freedom to choose when to start and end their work. Flexitime provides workers with a new way to cater to their domestic responsibilities and in turn may reduce the costs of participating in the labour market. Therefore, it is closely connected with workers’ compensation structure, human capital accumulation process, labour supply and job mobility. The effects of flexitime on workers’ labour market outcomes are analysed from three aspects: wage, labour supply, and job mobility. The first chapter gives an introduction and overview of the thesis. The second chapter is a study on the compensating wage differentials associated with flexitime. In general I do not find convincing evidence showing the existence of compensating wage differentials associated with flexitime. One possible reason might be that flexitime brings additional benefits to firms (such as increased productivity and reduced turnover rate) so that firms may not necessarily need to reduce actual wages in exchange for flexitime provision.In the third chapter, I develop a model describing how flexitime may affect workers’ labour supply decisions. The main finding of the model is that flexitime will increase workers’ labour supply when the benefit associated with flexitime (increased child care production efficiency) is high relative to the cost of wage reduction (prediction 1). Meanwhile, the model also predicts that flexitime causes high human capital workers to increase their labour supply more than low human capital workers (prediction 2). Empirical findings show that flexitime is positively associated with working mothers’ labour market hours, which confirms model prediction 1. However, there is arguably insufficient empirical evidence verifying model prediction 2. The fourth chapter considers the relationship between flexitime and workers’ job satisfaction and job mobility. Flexitime is associated with high job satisfaction levels for both male and female workers. It also reduces the probability of quitting for female workers with young children. Male workers’ job mobility decisions are not significantly affected by flexitime. The fifth chapter gives the conclusion of the thesis.