The Effect of Non-Pecuniary Job Attributes on Labour Supply

Abstract

The aim of this paper is to analyse the effect of non-pecuniary job attributes on labour supply. We develop a discrete choice model of labour supply where the choice alternatives are characterised by bundles of hours of work and job insecurity. The parameters of the utility function are obtained using maximum simulated likelihood with Halton sequences to account for unobserved heterogeneity in preferences. We compare the predictive power and labour supply elasticities obtained with our model to those of a more traditional model where only discrete hours choices characterise a job. The results show that once job insecurity is included in the discrete choice alternatives, the predictive power of the model improves significantly. Labour supply elasticities are lower than those obtained by a traditional discrete hours model, but not significantly different. Finally, a decrease of job insecurity at work has a positive and significant effect on participation, implying that policies aimed at improving working conditions could be used to influence labour supply decisions.