Working Paper: CEPR ID: DP16843
Authors: Juan J. Dolado; Etienne Lale; Hélène Turon
Abstract: We propose a model to evaluate the U.K.’s zero-hours contract (ZHC) – a contract that exemptsemployers from the requirement to provide any minimum working hours, and allows employees todecline any workload. We find quantitatively that ZHCs improve welfare by enabling firms with morevolatile business conditions to create additional jobs. While weaker than job creation, substitutioneffects – some jobs that are otherwise viable under regular contracts are advertised as ZHCs –are sizable and likely explain negative reactions against ZHCs. Our model also assesses increasedlabor-force participation from ZHCs which appeal to individuals who prefer flexible work schedules.
Keywords: zero-hours contracts; working hours; gig economy; flexibility
JEL Codes: E24; J22; J23; J63; L84
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ZHCs (R28) | job creation (J68) |
| ZHCs (R28) | labor force participation (J22) |
| ZHCs (R28) | substitution effect (D11) |
| substitution effect (D11) | negative public reactions towards ZHCs (R28) |
| ban on ZHCs (R28) | unemployment rate (J64) |
| ban on ZHCs (R28) | employment rate (J68) |
| ZHCs (R28) | welfare improvement (I38) |