 The 40-Hour Work WeekNo 2024rwp-225, Working papers from Yonsei University, Yonsei Economics Research Institute Abstract: Approximately half of U.S. employees adhere to the constraints of the traditional 40-hour work week. This study examines implications of this standardized work schedule. To this end, a novel heterogeneous-agent model is developed, incorporating a wage penalty function faced by households when working fewer hours than a specific threshold. The calibrated model captures the salient features of the empirical distribution of hours worked, with a notable spike at the 40-hour mark. The study reveals the 40-hour work week as a critical determinant of both micro and macro labor supply elasticities. It yields a small micro elasticity with heterogeneity across households, while the macro elasticity is larger, making the extensive margin more influential. Moreover, the 40-hour work week plays a significant role in shaping earnings inequality over the business cycle. Ultimately, this paper uncovers the vulnerability of households constrained by this work schedule to the adverse effects of business cycle fluctuations. Keywords: 40-hour work week; labor supply elasticity; wage penalty function; welfare effect of business cycles (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:yon:wpaper:2024rwp-225 Access Statistics for this paper More papers in Working papers from Yonsei University, Yonsei Economics Research Institute Contact information at EDIRC. |
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