Do workers like employer driven flexibility? Experimental evidence on work and pay uncertainty and willingness to work

Abstract

Flexible employment arrangements where workers only provide labour (and are paid) when requested to by their employer have proliferated. How do workers react to the resulting instability in work schedules and pay? This study seeks to provide an answer using experimental methods. 301 low-income, working age, non-student individuals took part in an on-line experiment simulating standard and zero-hours contractual conditions. Results unambiguously support the hypothesis that work uncertainty discourages work. This is not only because variability in work availability reduced total expected pay but also because uncertainty itself is avoided, even at the cost of lower total earnings. Public benefits play an important moderating role. Workers are more likely to accept uncertain work and pay when access to out of work benefits is limited or when benefits automatically top up incomes during periods when work is unavailable.