Employment stability via annualized hours contracts?

The presented paper proves that working time arrangements, which include hours flexibility and enable hours deposits, are appealing under product market uncertainty. The model integrates efficiency wage arguments into an implicit insurance-contract environment, thus extending the existing literature. The solutions are renegotiation-proof and the long-run optimum is spot implementable. Moreover, well-defined complementarities with additional instruments exist: institutionalized systems of firm level communication and information, investments in information technology and further training as well as team work together with working time accounts imply positive system effects, thus constituting a complementary human resource management system.