The Incentive for Working Hard: Explaining Hours Worked Differences in the U.S. and Germany

Linda A. Bell and Richard Freeman

No 8051, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper seeks to explain the greater hours worked by Americans compared to Germans in terms of forward-looking labor supply responses to differences in earnings inequality between the countries. We argue that workers choose current hours of work to gain promotions and advance in the distribution of earnings. Since US earnings are more unequally distributed than German earnings, the same extra work pays off more in the US, generating more hours worked. Supporting this inequality-hours hypothesis, we show that in both countries hours worked is positively related to earnings inequality in cross section occupational contrasts and that hours worked raises future wages and promotion prospects in longitudinal data.

JEL-codes: J21 J22 (search for similar items in EconPapers)
Date: 2000-12
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Published as “The Incentive for Working Hard: Explaining Hours Worked Differences in the US and Germany,” with Linda A. Bell. Labour Economics Special Conference Volume 8:2 (May 2001) pp 181-202.

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Journal Article: The incentive for working hard: explaining hours worked differences in the US and Germany (2001)
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