The economics of temporal and locational flexibility of work

Abstract

In recent years employees have become increasingly able to control temporal and locational aspects of their work. This temporal and locational flexibility of work (TLF) is usually implemented via a variety of arrangements, such as flexi-time, telehomework, and part-time work, which facilitate employees with flexibility in the schedule, location, and duration of their work. Many employees can choose or at least modify within certain boundaries when, where, and how long they work. Almost 50% of the employees in the European Union can influence their work schedules, 20% work part-time, and roughly 10% engage in telework. In the Netherlands almost a third of the employees works at home at least once a week even and roughly half work part-time. Despite this increasing relevance of TLF, its economic consequences have received relatively little attention in empirical research so far, particularly with respect to schedule and location flexibility. This study therefore attempts to shed some light on four relevant labour-related aspects and consequences of increased TLF for different stakeholders. We first take a look at employees and analyse the effects of TLF on the fit between working times and private life and on job satisfaction on the one hand and the impact on their career development on the other. Second we study whether TLF leads to a decrease in sickness absenteeism; something employers would also gain from. Finally we analyse whether schedule and location flexibility, assuming that they improve the combination of work and private life, leads to an increase in labour supply. Against the backdrop of an ageing society and expected labour force shortages in the future, this would be a benefit for the economy as a whole. Based on Dutch panel data, our results suggests that flexi-time increases both the fit between working time and private life as well as job satisfaction, whereas teleworking improves only job satisfaction and part-time only working-time fit. Telework may harm careers, however, since fewer promotions and employer-paid trainings are awarded to regular teleworkers. Flexi-time and telework do not increase the number of hours worked. Expectations to increase the labour supply of part-time workers with these measures as a remedy for labour force shortages are therefore not founded by our empirical evidence. Our analysis of absenteeism, based on a cross-sectional survey of Dutch public-sector employees, reveals that schedule and location flexibility decrease the frequency and length of sickness absences. Given the costs of absences, TLF can therefore be beneficial for employers as well.