Essays on uncertainty and temporary employment

Tan, JoAnn (2025) Essays on uncertainty and temporary employment. PhD thesis, University of Glasgow.

Abstract

This dissertation examines uncertainty and temporary employment in the United Kingdom, a country affected by global economic shocks such as the Great Financial Crisis and COVID-19 but also uniquely characterised by exceptionally high uncertainty during the Brexit negotiations, and where temporary employment—defined as employment with a predetermined termination date—is a consistent feature of its labour market.

The dissertation begins by exploring the broader effects of uncertainty. The first chapter constructs industry division-specific microeconomic uncertainty measures for the UK and applies them within a panel vector autoregressive (VAR) framework to assess the impacts of uncertainty. The findings demonstrate that, despite being underutilised in the uncertainty literature due to a lack of disaggregated measures, panel VARs can provide evidence consistent with findings from the uncertainty literature that use aggregate data. Furthermore, they provide new insights into the heterogeneous effects of uncertainty. Specifically, the magnitude of investment decline following a microeconomic uncertainty shock varies significantly across divisions, even within the same industry. The analysis also reveals differences in debt dynamics between manufacturing and services industry divisions following a microeconomic uncertainty shock.

The dissertation then turns to the topic of temporary employment. Rather than providing an exhaustive overview of temporary employment in the UK, the second chapter complements the existing literature by focusing on underexplored areas, including reasons for temporary employment, gender differences, and geographical variations in trends and correlations with macroeconomic variables in the UK. Using probit regressions, this chapter provides preliminary evidence suggesting that uncertainty is associated with a higher probability of individuals being in temporary employment.

Finally, the dissertation brings together the themes of uncertainty and temporary employment. The third chapter provides novel empirical evidence of the positive association between uncertainty and the size of temporary employment through a VAR model. To account for these empirical results, the chapter proceeds with a partial equilibrium model that isolates the role of uncertainty in shaping labour composition. Simulations from the model show that uncertainty shocks initially reduce the aggregate share of temporary labour, but firms in the aftermath of heightened uncertainty become more cautious and subsequently react by favouring temporary labour over permanent labour. This shift is attributed to the higher adjustment costs associated with permanent labour that make hiring and firing mistakes more costly for permanent than for temporary labour.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Additional Information: Supported by funding from the Productivity Institute.
• Subjects: H Social Sciences > HB Economic Theory; H Social Sciences > HD Industries. Land use. Labor
• Colleges/Schools: College of Social Sciences > Adam Smith Business School
• Funder's Name: Productivity Institute
• Supervisor's Name: Tsoukalas, Professor John and Battisti, Professor Michele
• Date of Award: 2025
• Depositing User: Theses Team
• Unique ID: glathesis:2025-85550
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 27 Oct 2025 15:07
• Last Modified: 27 Oct 2025 15:07
• Thesis DOI: 10.5525/gla.thesis.85550
• URI: https://theses.gla.ac.uk/id/eprint/85550