Flexible Work Scheduling as an Innovation : A Behavioral Economic Approach

A theoretical economic model is developed to explain the disparities in flexible work scheduling observed across firms, workplaces, sectors and time periods. The model incorporates features of the behavioral economics approach to explaining the adoption of workplace innovations. The supply of flextime provided by employers is determined by firms' perceived costs of enacting versus the costs incurred of not adopting it. The practice would be adopted if it is expected to yield net unit labor cost savings. While technological advances have increased firm capacity to provide them, worker demand for flexible work schedules still far exceeds the supply. In the case of cost neutrality, the extent to which the supply of flex-time falls short of worker demand for it depends on the extent to which employers either choose to or are forced to accommodate employee preferences for greater time sovereignty. The public goods property of flexible work schedules provide a strong case for subsidizing firms who adopt them as an incentive and to defray their start-up cost