Flexible Work Scheduling as an Innovation: A Behavioral Economic Approach

39 Pages Posted: 23 May 2007

See all articles by Lonnie Golden

Lonnie Golden

Pennsylvania State University - Abington College; Economic Policy Institute; Project for Middle Class Renewal

Morris Altman

University of Newcastle

Date Written: May 2007

Abstract

A theoretical economic model is developed to explain the disparities in flexible work scheduling observed across firms, workplaces, sectors and time periods. The model incorporates features of the behavioral economics approach to explaining the adoption of workplace innovations. The supply of flextime provided by employers is determined by firms' perceived costs of enacting versus the costs incurred of not adopting it. The practice would be adopted if it is expected to yield net unit labor cost savings. While technological advances have increased firm capacity to provide them, worker demand for flexible work schedules still far exceeds the supply. In the case of cost neutrality, the extent to which the supply of flex-time falls short of worker demand for it depends on the extent to which employers either choose to or are forced to accommodate employee preferences for greater time sovereignty. The public goods property of flexible work schedules provide a strong case for subsidizing firms who adopt them as an incentive and to defray their start-up cost.

Keywords: Hours of Work, Flexible Work Schedules, Labor Flexibility, Behavioral Economics

JEL Classification: J32, J23, D23

Suggested Citation

Golden, Lonnie and Altman, Morris, Flexible Work Scheduling as an Innovation: A Behavioral Economic Approach (May 2007). Available at SSRN: https://ssrn.com/abstract=988173 or http://dx.doi.org/10.2139/ssrn.988173

Lonnie Golden (Contact Author)

Pennsylvania State University - Abington College ( email )

1600 Woodland Rd.
Abington, PA 19001
United States
215-881-7596 (Phone)
215-881-7333 (Fax)

Economic Policy Institute ( email )

1660 L Street NW, Suite 1200
Washington, DC 20036
United States

Project for Middle Class Renewal ( email )

1408 W. Gregory Dr.
Urbana, IL 61801
United States

Morris Altman

University of Newcastle ( email )

University Drive
Callaghan, NSW 2308
Australia

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