Labour market flexibility and unemployment duration: evidence from the UK

Using a combination of UKHLS and LFS data and a discrete time model, we test the hypothesis that unstable jobs with variable hours or pay enhance the job-finding chances of the unemployed in the UK. We find no evidence that the share of unstable jobs in the unemployed person’s local labour market impacts on the probability to move into employment. This result holds both for men and women and for groups with low employability such as the low educated and the long-term unemployed. It is robust to alternative ways of defining unstable jobs and to the inclusion of unobserved heterogeneity. Overall, findings cast doubt on the importance of labour market flexibility for employment creation.