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Free to choose? Differences in the hours determination of constrained and unconstrained workers

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  • Mark L. Bryan

Abstract

In surveys, large minorities of individuals typically report that they would like to change their weekly working hours at their current hourly wage. If this evidence reflects genuine constraints on choice of hours, the determinants of hours should differ between constrained and unconstrained groups. Controlling for selection by an extension of the Heckman two-step method to ordered selection and panel data, and using a sample of manual men, I find that unconstrained workers' hours are determined differently from those of constrained workers. I present evidence that local labour market conditions affect the hours of constrained but not of unconstrained workers. I also correct for the potential bias resulting from the use of observed hours to derive the hourly wage, by instrumenting it with its lagged value. The combination of ignoring hours constraints and assuming the derived hourly wage is exogenous imparts a downward bias to wage elasticity estimates. Copyright 2007 , Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 59 (2007)
Issue (Month): 2 (April)
Pages: 226-252

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Handle: RePEc:oup:oxecpp:v:59:y:2007:i:2:p:226-252

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  1. Joseph Altonji & Christina Paxson, 1985. "Job Characteristics and Hours of Work," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 578, Princeton University, Department of Economics, Industrial Relations Section..
  2. René Böheim & Mark P. Taylor, 2004. "Actual and Preferred Working Hours," British Journal of Industrial Relations, London School of Economics, London School of Economics, vol. 42(1), pages 149-166, 03.
  3. Ham, John C, 1982. "Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(3), pages 335-54, July.
  4. Altonji, Joseph G, 1986. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages S176-S215, June.
  5. Stewart, Mark B & Swaffield, Joanna K, 1997. "Constraints on the Desired Hours of Work of British Men," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(441), pages 520-35, March.
  6. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
  7. Zabel, Jeffrey E., 1992. "Estimating fixed and random effects models with selectivity," Economics Letters, Elsevier, Elsevier, vol. 40(3), pages 269-272, November.
  8. Vella, F. & Verbeek, M.J.C.M., 1999. "Two-step estimation of panel data models with censored endogenous variables and selection bias," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-80344, Tilburg University.
  9. Moffitt, Robert A., 1999. "New developments in econometric methods for labor market analysis," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 24, pages 1367-1397 Elsevier.
  10. repec:fth:prinin:262 is not listed on IDEAS
  11. Card, David, 1990. "Labor supply with a minimum hours threshold," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 33(1), pages 137-168, January.
  12. Kahn, Shulamit & Lang, Kevin, 1991. "The Effect of Hours Constraints on Labor Supply Estimates," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 73(4), pages 605-11, November.
  13. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 115-132, July.
  14. George J. Borjas, 1980. "The Relationship between Wages and Weekly Hours of Work: The Role of Division Bias," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 15(3), pages 409-423.
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Cited by:
  1. Gielen, Anne C., 2007. "Working Hours Flexibility and Older Workers' Labor Supply," IZA Discussion Papers 2946, Institute for the Study of Labor (IZA).
  2. Richard Blundell & Mike Brewer & Marco Francesconi, 2008. "Job Changes and Hours Changes: Understanding the Path of Labor Supply Adjustment," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 26(3), pages 421-453, 07.
  3. Heineck, Guido & Schwarze, Johannes, 2004. "Fly Me to the Moon: The Determinants of Secondary Jobholding in Germany and the UK," IZA Discussion Papers 1358, Institute for the Study of Labor (IZA).
  4. Catherine SMITH, 2014. "Did the Intergenerational Solidarity Pact increase the employment rate of the elderly in Belgium? A macro-econometric evaluation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 2014009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. KURODA Sachiko & YAMAMOTO Isamu, 2011. "Firm's demand for work hours: Evidence from multi-country and matched firm-worker data," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 11024, Research Institute of Economy, Trade and Industry (RIETI).

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