Flexible Labor Supply Research Articles

When flexible labour supply generates indeterminacy: integrated labour control in place-bound platform work

Labour platforms such as UBER, PeoplePerHour and Rappi have become a global phenomenon. Their business model is affecting global labour markets and disrupting service industries such as ride hailing, cognitive work and food delivery. Labour platforms not only rely on a flexible labour supply but are also at the forefront of utilising new technologies such as algorithms to control labour. For this reason, scholarly analyses of labour platforms are increasingly employing an integrated approach that accounts for the different layers of control intersecting at the point of production. Following such an approach, an ethnographic case study in platform food delivery was conducted, aided by semi-structured interviews and digital artifacts. This case study shows that algorithmic control is able to reduce effort indeterminacy but is less equipped to cope with indeterminacy of mobility induced by flexible labour supply. As such, algorithmic control was integrated with two additional control mechanisms: first, core workers were put into a position of controlling peripheral workers; and second, attempts were made to craft a community that offered strategic managerial avenues. Altogether, given the interplay between effort and mobility power, the study contributes to an understanding of technological control internal to social and institutional relations.

Labor Supply Flexibility and Portfolio Selection with Early Retirement Option

Labor Supply Flexibility and Portfolio Selection with Early Retirement Option

The optimal investment problem with inflation and liquidity risk

Inflation, liquidity and labor supply flexibility are three macroeconomic factors that significantly affect financial assets pricing. All three factors need to be considered in creating investment policies to minimize the bias and achieve the optimal portfolio selection. This paper jointly considers the impact of these three factors on the optimal investment–consumption strategy. We start with measuring liquidity with a jump diffusion process and propose a new utility function. Then we derive the Hamilton–Jacobi–Bellman (HJB) equation for the value function. Next, the analytical solution of the optimal strategy are obtained under the cases of stochastic and non-stochastic wages, respectively. Finally, numerical examples are provided to show the impact of these three factors on portfolio selections.

Labor Supply Flexibility and Portfolio Selection with Early Retirement Option

Labor Supply Flexibility and Portfolio Selection with Early Retirement Option

Odds stacked against workers: datafied gamification on Chinese and American food delivery platforms

AbstractThis article presents a cross-national comparative study examining how American and Chinese platform companies approach the gamification of on-demand food delivery. The study, based on ethnographic fieldwork in New York City and Beijing, shows how couriers in these cities negotiate the gamified app-based systems designed to convince them to log in and keep working. We argue that such systems are not only a salient form of ‘algorithmic management’—as has been argued before—but also demonstrate the central importance of datafication within the organizational strategies of food delivery companies operating under conditions of financialized platform capitalism. Indeed, the deeply financialized nature of the on-demand food delivery industry creates conditions in which companies experiment with data-driven gamification techniques in an effort to manipulate their flexible labor supply in an agile and cost-effective way—to thereby elicit higher productivity and meet expectations of investors and shareholders. Our comparative analysis challenges assumptions of a universal mode of gamification and highlights the differences between such situated techniques and their impacts on workers, identifying two distinct design approaches that we term ‘Deal or No Deal’ in New York and ‘Grab-and-Stack’ in Beijing.

Women’s Vulnerability to the Economic Crisis through the Lens of Part-time Work in Spain

This article studies women’s vulnerability to the economic crisis of 2008 through the lens of part-time work in Spain. It posits that part-time work made the female employment position more fragile by acting as a transmission mechanism of traditional gender norms that establish women as secondary workers. This argument is tested through an analysis of Labour Force Survey data from 2007 to 2014 that examines the influence of the employment situation of the household on women’s part-time employment patterns. The results expose the limited take-up of part-time work but also persistent patterns of involuntariness and underemployment corresponding to negative household employment situations, highlighting the constraining role of gender norms borne by the relative position of part-time work in the configuration of employment structures. The article concludes that, during the crisis, part-time work participated in the re-establishment of women as a family dependent and flexible labour supply, increasing their vulnerability.

Presidential Address 2019: How Should Tax Progressivity Respond to Rising Income Inequality?

AbstractWe address the question in the title in a heterogeneous-agent incomplete-market model featuring exogenous idiosyncratic risk, endogenous skill investment, and flexible labor supply. The tax and transfer schedule is restricted to being log-linear in income, a good description of the US system. Rising inequality is modeled as a combination of skill-biased technical change and growth in residual wage dispersion. When facing shifts in the income distribution like those observed in the United States, a utilitarian planner chooses higher progressivity in response to larger residual inequality but lower progressivity in response to widening skill price dispersion reflecting technical change. Overall, optimal progressivity is approximately unchanged between 1980 and 2016. We document that the progressivity of the actual US tax and transfer system has similarly changed little since 1980, in line with the model prescription.

The impact of paid family leave on household savings

Research on paid family leave (PFL) has largely focused on various child outcomes and the labor force outcomes of mothers. Absent from previous work is an analysis of how such a policy alters incentives to plan for expected income shocks, a central question in other social insurance contexts. A conceptual framework demonstrates the potential for PFL to increase or decrease household saving depending on labor supply flexibility assumptions. Using the Survey of Income and Program Participation, I present evidence that the introduction of PFL in California reduced the savings of expectant parents relative to different comparison groups. Imprecise heterogeneity analysis suggests the crowd out is concentrated in higher-income families.

Optimal progressivity with age-dependent taxation

This paper studies optimal taxation of earnings when the degree of tax progressivity is allowed to vary with age. The setting is an overlapping-generations model that incorporates irreversible skill investment, flexible labor supply, ex ante heterogeneity in the disutility of work and the cost of skill acquisition, partially insurable wage risk, and a life cycle productivity profile. An analytically tractable version of the model without intertemporal trade is used to characterize and quantify the salient trade-offs in tax design. The key results are that progressivity should be U-shaped in age and that the average marginal tax rate should be increasing and concave in age. These findings are confirmed in a version of the model with borrowing and saving that we solve numerically.

Stopping the Clock On Retirement: Target Wealth Stopping Time Problems

A common approach to retirement planning focuses on building sufficient funds to retire at a fixed, predefined retirement time horizon. Optimal portfolio strategies are applied in an effort to achieve this goal. These strategies typically lead to the wealth at retirement having substantial uncertainty, making it difficult for investors to understand how much to save and how the savings rate impacts their wealth when they retire. A cash investment overcomes these problems, but is generally too expensive for most savers. Instead, we optimize on statistics of the stopping time at which one has achieved a target wealth. This is related to the notion of labor optionality introduced in Labor supply flexibility and portfolio choice in a life cycle model, 1992, by Bodie, Merton, and Samuelson, and avoids some of the shortcomings of predefined retirement time approaches. We solve this retirement stopping time problem using stochastic optimization with a Markov control. The objective function is relatively flat near the optimum, so, for example, reducing both variance and trading frequency have little impact on the optimum. We also prove that shorting strategies are stochastically dominated by ones which do not short, which is of general interest for financial optimization problems.

"The Missing Factor": Economy and Labor in Late Roman North Africa (400–600 CE)

This article examines the re-emergence of commercialized agriculture from the fourth century onwards and the related penetration of the monetary economy into the rural areas, and it seeks to demonstrate a causal connection between economic expansion, wealth accumulation, and the increase of wage laborers—of landless peasants in particular. It accordingly argues that as a form of organization of labor, tenancy remained quantitatively predominant, but it was the very existence of a supplementary labor force composed of slaves and wage laborers that made tenancy so resilient in the face of changes in market demand. While slavery played a pivotal role in elite control over the commercialized production of specific cash crops, by offering a flexible seasonal labor supply, wage-labor assured the elasticity necessary for large, landed infrastructures. In essence, this article shows that it was this mixed labor regime that provided the real pay-offs. It also claims that since this regime was accompanied by the increased predominance of gold in all types of transaction, the process of economic growth widened the polarization between the two main social classes, one defined by factors of land or capital and the other by labor. This state of affairs generated as a further consequence the reaction of the laborers, which mainly took the form of an increased, and at times a strategic, mobility.

Optimal Tax Progressivity: An Analytical Framework*

Abstract What shapes the optimal degree of progressivity of the tax and transfer system? On the one hand, a progressive tax system can counteract inequality in initial conditions and substitute for imperfect private insurance against idiosyncratic earnings risk. On the other hand, progressivity reduces incentives to work and to invest in skills, distortions that are especially costly when the government must finance public goods. We develop a tractable equilibrium model that features all of these trade-offs. The analytical expressions we derive for social welfare deliver a transparent understanding of how preference, technology, and market structure parameters influence the optimal degree of progressivity. A calibration for the U.S. economy indicates that endogenous skill investment, flexible labor supply, and the desire to finance government purchases play quantitatively similar roles in limiting optimal progressivity. In a version of the model where poverty constrains skill investment, optimal progressivity is close to the U.S. value. An empirical analysis on cross-country data offers support to the theory.

On the effects of changing mortality patterns on investment, labour and consumption under uncertainty

In this paper we extend the consumption–investment life cycle model for an uncertain-lived agent, proposed by Richard (1974), to allow for flexible labour supply. We further study the consumption, labour supply and portfolio decisions of an agent facing age-dependent mortality risk, as presented by UK actuarial life tables spanning the time period from 1951–2060 (including mortality forecasts). We find that historical changes in mortality produce significant changes in portfolio investment (more risk taking), labour (decrease of hours) and consumption level (shift to higher level) contributing up to 5% to GDP growth during the period from 1980 until 2010.

Life Cycles and Mortality

In this paper we extend the consumption-investment life cycle model for an uncertain-lived agent, proposed by Richard (1974), to allow for flexible labor supply. We further study the consumption, labor supply and portfolio decisions of an agent facing age-dependent mortality risk, as presented by UK actuarial life tables spanning the time period from 1951-2060 (including mortality forecasts). We find that historical changes in mortality produces significant changes in portfolio investment (more risk taking), labour (decrease of hours) and consumption level (shift to higher level), but no explicit effect on consumption growth was found due to the full insurance against loss of life.

How Much to Work: Evidence of Reference Dependence in Taxi Drivers

This paper presents new evidence of labor supply behavior consistent with workers having reference points in daily income. Moreover, consistent with a model of gain-loss utility, I find that workers with flexible labor supply exhibit increasing marginal utility in income over the loss region and diminishing marginal utility in income over the gain region. The setting is taxi drivers, a group which faces a substantial degree of uncertainty in their hourly earnings but control over when to stop working within a shift. Previous papers studying taxi drivers have found mixed evidence for reference dependent behavior. Using a driver's propensity to stop working within a shift, I show not only the existence of a reference point in a large proportion of drivers, but I am also able to estimate what the reference point is without explicit functional form or ex ante assumptions about existence. Furthermore, I show that drivers are less likely to stop working the closer they are to their reference point, indicating their preferences for daily income have a Prospect theoretic S-shape.

High demand, cheap supply: Irish immigration policies and the role of the state (1992–2007)

One factor which contributed to Ireland’s economic growth during the ‘Celtic Tiger’ era was access to a cheap flexible labour supply. The Irish state played a central role in facilitating and shaping this labour supply, through its formulation of immigration policies and its role in influencing labour market structure, thereby influencing the nature of the workers who entered the Irish labour market. Placing the analysis of Irish immigration policy within the unfolding global systems of flows of people and capital prevents the classification of Ireland, or any country, as a unique experience. Economically driven moves by the Irish state, specifically in terms of labour supply, are evident in the recruitment drives supported through the Celtic Tiger and with the expansion of the European Union in 2004. This paper outlines how Ireland’s immigration policy during the Celtic Tiger shaped the labour market by determining which workers did what jobs. It also discusses the nature of the Irish state and how this contributes to immigration policy outcomes.

High demand, cheap supply: Irish immigration policies and the role of the state (1992–2007)

One factor which contributed to Ireland's economic growth during the ‘Celtic Tiger’ era was access to a cheap flexible labour supply. The Irish state played a central role in facilitating and shaping this labour supply, through its formulation of immigration policies and its role in influencing labour market structure, thereby influencing the nature of the workers who entered the Irish labour market. Placing the analysis of Irish immigration policy within the unfolding global systems of flows of people and capital prevents the classification of Ireland, or any country, as a unique experience. Economically driven moves by the Irish state, specifically in terms of labour supply, are evident in the recruitment drives supported through the Celtic Tiger and with the expansion of the European Union in 2004. This paper outlines how Ireland's immigration policy during the Celtic Tiger shaped the labour market by determining which workers did what jobs. It also discusses the nature of the Irish state and how this ...

Gambling on Grapes: Management, Marketing, and Labor in California Agribusiness

From the Great Depression to the Great Recession of the 1970s, American agricultural policy institutionalized growers’ anti-union politics based on the unique characteristics of farming. California growers argued they needed access to a flexible and cheap labor supply during the “managed crisis” of the harvest. At the same time, they aggressively pursued business strategies that would regularize production and marketing. However, the commercialization of agriculture made them more vulnerable to boycotts by the United Farm Workers Union, which forced California growers to deal with unionism during the late 1960s. Growers temporarily embraced collective bargaining legislation as a way of derailing farm unionism and regaining control over their managerial and marketing prerogatives.

Experience, Loss Aversion, Narrow Framing: Can We Explain the Empirical Evidence on Household Portfolio Choice Over the Life-Cycle?

This paper examines the life-cycle impact of preference factors as experience, loss aversion, and narrow framing on explaining the empirical low stock market participation, low stock share conditional on participation, and positive relationships between financial wealth and participation as well as conditional stock share. With respect to these investment behaviors and to consumption pattern, assuming common preference parameters and the high historical equity risk premium, the results show a better explanatory power than the standard consumption based utility function. In addition, the model predicts high levels and slow withdrawal rates of financial wealth among elderly people, which are consistent with the empirical evidence. Moreover, the model predictions are robust to flexible labor supply and endogenous retirement age.

The Impact of Ireland’s Recession on the Labour Market Outcomes of its Immigrants

In the mid-2000s, Ireland experienced a large inflow of immigrants, partly in response to strong economic growth but also in response to its decision to allow full access to its labour market when EU expansion occurred in May 2004. Between 2004 and 2007, the proportion of non-nationals living in Ireland almost doubled, increasing from 7.7 to 13.1%. Between 2008 and 2009, Ireland experienced one of the most acute downturns in economic activity in the industrialised world, with a cumulative fall in Gross National Product of close to 14%. In this article, we assess how this downturn has impacted upon the employment outcomes of non-nationals relative to natives. We find huge job losses among immigrants, with an annual rate of job loss of close to 20% in 2009, compared to 7% for natives. A higher rate of job loss for immigrants is found to remain when we control for factors such as age and education. We also show how an outflow of non-nationals is occurring. The findings have many implications. In particular, the results point to economic vulnerability for immigrants. However, they also point to a potential macroeconomic benefit to Ireland in terms of a flexible labour supply adjustment.