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Title: Why Choose Alternative Work Arrangements?

Citation Type: Miscellaneous

Publication Year: 2019

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Abstract: Alternative Work Arrangements (AWAs) are contract forms with lower wages, fewer benefits, and fewer legal protections. Firms using AWAs pay fewer fixed costs, but AWAs continue to account for only 10% of employment. I investigate whether AWAs respond to negative labor demand shocks, and could explain the lack of systematic increase. In a simple conceptual framework where firms can employ a worker in a short-term contract for a lower fixed cost, marginally profitable firms will use AWAs. Negative shocks push AWA-using firms out of business, reducing aggregate AWAs, conditional on employment. I test the effect of two negative labor demand shocks-exogenous decreases in housing wealth and increased competition from China-on workers' marginal probability of being in an AWA. I find that negative housing wealth shocks decreased workers' probability of being in an AWA by 0.25% for every 1% of housing price declines. Direct trade competition reduced workers probability of being in an AWA, however when examining the supply-chain effects of trade, 87% of workers saw a predicted increase. A simple counterfactual suggests that absent housing price declines from the Great Recession, AWAs would have increased by 1.5% since 2005. *

Url: http://conference.iza.org/conference_files/Statistic_2019/deibler_d28232.pdf

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Authors: Deibler, Daniel Mark

Publisher: Columbia University

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

Countries: United States