Security of tenure in conventional and flexible employment regimes: A neoinstitutional perspective

Security of tenure is discussed in this paper by contrasting conventional and recent hybrid so-called flexible employment regimes. These regimes will be analyzed in a neoinstitutional perspective—that is, within transaction cost and agency theory frameworks, including public choice considerations.We start from the premise that in a standard employment scenarioex ante hostages may not be taken and that limitedex post compensation payments are efficient. We then trace features of safeguarding employee investment in hybrid flexible regimes such as new independent contracting, franchising (and other relevantvariants of symbiotic contracting, capacity-oriented variable work time schemes, job sharing, and so on. We compare these new institutional creations in the labor market with standard regimes under the hypothesis that in an ideal scenario Pareto superior moves are feasible but that there is a systematic aberration from optimality caused by information asymmetries, search constraints (boundedness), and a lack of adaptive capacities of the regime users, particularly employees. This regime deception factor (RDF) needs theoretical and empirical scrutiny from both legal and economic perspectives.