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Constraints on Hours within the Firm

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  • Claudio Labanca
  • Dario Pozzoli

Abstract

Firms often impose constraints on working hours. While many believe that these constraints shape labor supply decisions, little evidence exists to support such views. We explore this relationship using linked employer-employee data on hours worked and the variation in tax rates derived from the 2010 Danish tax reform. We show that hours worked are unresponsive to individual tax changes in firms with strict constraints, whereas they respond to these changes, directly and through spillovers, in firms with looser constraints. Starting from these findings, we discuss the determinants of hours constraints, distinguishing between firms’ technologies and coordination of hours among coworkers.

Suggested Citation

  • Claudio Labanca & Dario Pozzoli, 2022. "Constraints on Hours within the Firm," Journal of Labor Economics, University of Chicago Press, vol. 40(2), pages 473-503.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/714827
    DOI: 10.1086/714827
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    Cited by:

    1. Schmutte, Ian M. & Skira, Meghan M., 2020. "The Response of Firms to Maternity Leave and Sickness Absence," GLO Discussion Paper Series 691, Global Labor Organization (GLO).
    2. Kuhn, Moritz & Luo, Jinfeng & Manovskii, Iourii & Qiu, Xincheng, 2023. "Coordinated firm-level work processes and macroeconomic resilience," Journal of Monetary Economics, Elsevier, vol. 137(C), pages 107-127.
    3. Green, Colin P. & Heywood, John S., 2022. "Does Performance Pay Influence Hours of Work?," IZA Discussion Papers 15474, Institute of Labor Economics (IZA).
    4. Henrik Kleven & Claus Thustrup Kreiner & Kristian Larsen & Jakob Egholt Søgaard, 2023. "Micro vs Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort," NBER Working Papers 31549, National Bureau of Economic Research, Inc.
    5. Shao, Lin & Sohail, Faisal & Yurdagul, Emircan, 2023. "Are working hours complements in production?," Journal of Economic Dynamics and Control, Elsevier, vol. 153(C).
    6. Hans Schytte Sigaard, 2022. "Labor Supply Responsiveness to Tax Reforms," Economics Working Papers 2022-04, Department of Economics and Business Economics, Aarhus University.
    7. Spencer Bastani, 2023. "The Marginal Cost of Public Funds: A Brief Guide," CESifo Working Paper Series 10322, CESifo.
    8. Sigaard, Hans Schytte, 2023. "Estimating labor supply responses to Danish tax reforms," Journal of Public Economics, Elsevier, vol. 224(C).

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