Flexible work arrangements and precautionary behaviour: Theory and experimental evidence
Andreas Orland () and
No 04-2020, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences
In the past years, work time in many industries has become increasingly flexible opening up a new channel for intertemporal substitution. To study this, we set up a two-period model with wage uncertainty. This extends the standard saving model by allowing a worker to allocate a fixed time budget between two work-shifts or to save. To test the existence of these channels, we conduct laboratory consumption/saving experiments. A novel feature of our experiments is that we tie them to a real-effort style task. In four treatments, we turn on and off the two channels for consumption smoothing: saving and time allocation. Our four main findings are: (i) subjects exercise more effort under certainty than under risk; (ii) savings are strictly positive for at least 85 percent of subjects (iii) a majority of subjects uses time allocation to smooth consumption; (iv) saving and time shifting are substitutes, though not perfect substitutes.
Keywords: precautionary saving; labor supply; intertemporal substitution; experiment (search for similar items in EconPapers)
JEL-codes: D14 E21 J22 C91 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-lma, nep-mac and nep-upt
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Working Paper: Flexible Work Arrangements and Precautionary Behavior: Theory and Experimental Evidence (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hohdps:042020
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