The Economics of Flexible Work Scheduling: Theoretical Advances and Contemporary Paradoxes

A theoretical economic model is developed to explain the disparities in flexible work scheduling observed across firms, workplaces, sectors, and time periods. Given heterogeneity in firms’ costs, the supply of flextime is determined by firms’ costs of enacting versus not adopting it. The innovative practice would be adopted if it generates net unit labor cost savings. If it is cost neutral, the extent to which the supply of flextime falls short of worker demand for it depends on the extent to which employers must accommodate employee preferences for more time sovereignty and are induced by policy incentives to switch to flexible scheduling.