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    Heigh Ho, Heigh Ho: flexible labor contracts with real option characteristics

    Byrne, Julie and Pecchenino, Rowena A. (2019) Heigh Ho, Heigh Ho: flexible labor contracts with real option characteristics. Business Economics, 54 (1). pp. 25-34. ISSN 0007-666X

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    Abstract What is the strategic value of flexible labor contracts to workers? To answer this question, we examine workers' labor supply decisions when choosing among alternative work arrangements ranging from permanent and pensionable to fixed-term, shift work, zero-hour, and on-call to gigs. We then introduce the concept of real options as a framework in which to analyze contract valuation from the workers' perspective. For a non-standard employment contract to have real option value, the contract must both lead to future choices and enable advantageous access to future opportunities. Using case studies from a diverse set of industries and guided by the real options framework, we examine when contract flexibility contains valuable real option characteristics for the utility maximizing worker, or the profit maximizing firm, or, surprisingly, both.

    Item Type: Article
    Additional Information: Cite as: Byrne, Julie, and Rowena A. Pecchenino. "Heigh Ho, Heigh Ho: flexible labor contracts with real option characteristics." Business Economics, vol. 54, no. 1, Jan. 2019, pp. 25+. Gale Academic OneFile, Accessed 9 June 2022.
    Keywords: Flexibility; Gig economy; Real options; Standard labor contract;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 16061
    Identification Number:
    Depositing User: Prof. Rowena Pecchenino
    Date Deposited: 09 Jun 2022 11:05
    Journal or Publication Title: Business Economics
    Publisher: Gale Academic Onefile
    Refereed: Yes
    Use Licence: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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