Lower wages for less hours? A simultaneous wage-hours model for Germany

Elke Wolf

No 00-03, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: In this paper the impact of working hours on the gross hourly wage rate of West German women is analyzed. We use a simultaneous wage-hours model which takes into account the participation decision. First, our estimates show that the hourly wage rate is strongly a¤ected by the working hours. In order to avoid any assumptions about the functional form, we estimate linear spline functions. Second, we detect di¤erent wage-hours profiles for specific groups of individuals. Despite these di¤erences, the wage reduction for jobs with less than 20 hours a week and for overtime hours turns out to be a robust result. However, the hourly wage rate of jobs with 20 to 38 hours does not di¤er significantly. Third, for West German women, the exogeneity assumption of working hours in the wage regression must be rejected if the wage-hours locus is assumed to be the same for all individuals. As a result of this the wage rate of full-time employees is overestimated in the standrad OLS estimation.

JEL-codes: J22 J24 J31 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:5279

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