In this book, we treat absenteeism as a labour market phenomenon. Work contracts may or may not specify hours of work. If they do, absenteeism may arise. It will arise if workers' desired hours are fewer than (or possibly just different from) the hours specified in their contract. There are at least two ways in which such a circumstance might arise: it may be that workers sign contracts that they do not mean to keep; or it may be that their desired hours vary from time to time in some unpredictable fashion. In the latter view, contracts are signed with the intention that they be kept to, unless circumstances imply low desired hours.

The extant literature is not very clear as to which of these models is being used. Implicitly, the hedonic pricing model adopted by Allen and used by him to great effect takes the latter view. It is contrary to the idea of equilibrium in an hedonic pricing model for workers to want to sign a contract that does not reflect their desired hours. A better deal can be obtained by not doing so. Absenteeism in this model is part of the deal. Workers demand, and employers are prepared to supply, some flexibility in the contract, which will enable workers to be absent from time to time. How can this flexibility be modelled?