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Raising the Overtime Premium and Reducing the Standard Workweek: Short-Run Impacts on U.S. Manufacturing

Galiya Sagyndykova () and Ronald Oaxaca
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Galiya Sagyndykova: Nazarbayev University

No 12557, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A nine-factor input model is developed to estimate the monthly demand for employment, capital, and weekly hours per worker/workweek in U.S. Manufacturing. The labor inputs correspond to production and non-production workers disaggregated by overtime and non-overtime employment. Policy simulations are conducted to examine the short-run effects on the monthly growth rates for employment, labor earnings, capital usage, and the workweek from either a) raising the overtime premium to double-time, or b) reducing the standard workweek to 35 hours. Although the growth rate policy effects are heterogeneous across disaggregated labor input categories, on aver- age both policy changes exhibit negative effects on the growth rates of industry-wide employment, earnings, and non-labor input usage. The growth rate of the workweek is virtually unaffected by raising the overtime premium but is negatively impacted by reducing the standard work week.

Keywords: overtime; employment; workweek (search for similar items in EconPapers)
JEL-codes: J23 J88 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2019-08
New Economics Papers: this item is included in nep-cmp and nep-lma
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