Hours Constraints in Market Equilibrium

William Johnson

Virginia Economics Online Papers from University of Virginia, Department of Economics

Abstract: The observation that many workers report wanting to work more or fewer hours at their current rate of pay appears to contradict standard neoclassical theory. Although most jobs limit the ability of workers to choose hours, economists typically assume that workers can choose hours by choosing jobs. The puzzle is why workers have not chosen jobs which allow them to work the number of hours they prefer. This paper outlines two classes of reasons that hours constraints might be observed in a neoclassical market equilibrium – mismatch (caused by search costs or market thinness) or wedges between imagined and feasible hours-compensation combinations (caused by market power, implicit contracts, overtime premia and fixed costs of employment like fringe benefits.) Using proxies for each of these putative explanations and cross-section data on self-reported hours constraints I find support for explanations that rely on fixed cost fringe benefits, overtime premia, search costs and unions but no support for the monopsony power or market thinness explanations. Moreover, the data are consistent with two strong empirical implications of hours constraints being illusory in the sense that the jobs constrained workers would prefer are not economically feasible.

Keywords: hours of work; constraint; desired hours (search for similar items in EconPapers)
JEL-codes: J22 J32 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2006-07
New Economics Papers: this item is included in nep-bec and nep-lab
References: Add references at CitEc
Citations:

Downloads: (external link)
http://repec.as.virginia.edu/RePEc/vir/virpap/papers/virpap367.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vir:virpap:367

Access Statistics for this paper

More papers in Virginia Economics Online Papers from University of Virginia, Department of Economics
Bibliographic data for series maintained by Debby Stanford ().