Standard models of dynamic demand for labor tend to consider working time as predetermined. The recent development of flexibility agreements modifies the feasible set of firms in introducing new compensation rules which supersede traditional legal overtime premium schemes. The suggested model is intended to sketch the consequences of stylized flexibility agreements on the time path of working time and employment in the case of output constrained firms. It enables to examine the conditions for labor hoarding in troughs of the business cycle.
CONTENSOU, F. (1999). Working-time and Employment in a Cost of Change Model. In: Papers from the 1999 EALE Conference. Maastricht University.