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Testing labour supply and hours constraints

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  • Martinez-Granado, Maite

Abstract

This paper provides empirical evidence on the assumption that individuals freely decide the number of hours they work at a given wage, using US data on prime age males from the National Longitudinal Survey of Youth. Two types of individuals are considered: those who change job between two consecutive periods and those who do not. We estimate an endogenous switching labour supply equation consistent with a life-cycle model under uncertainty. In this context the endogeneity of movements, ignored in previous analysis, proves to be crucial to get consistent estimates. The results confirm that individuals are constrained in the number of hours they work on a given job and that the intertemporal substitution elasticities are usually upward biased when ignoring the possibility of some groups of individuals being off their labour supply curves.

Suggested Citation

  • Martinez-Granado, Maite, 1999. "Testing labour supply and hours constraints," UC3M Working papers. Economics 6106, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:6106
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    Cited by:

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    3. Malte Jauch, 2020. "The rat race and working time regulation," Politics, Philosophy & Economics, , vol. 19(3), pages 293-314, August.
    4. Joseph Altonji & Jennifer Oldham, 2003. "Vacation laws and annual work hours," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 27(Q III), pages 19-29.
    5. Robert Drago & Mark Wooden & David Black, 2009. "Long Work Hours: Volunteers and Conscripts," British Journal of Industrial Relations, London School of Economics, vol. 47(3), pages 571-600, September.
    6. Michael C. Knaus & Steffen Otterbach, 2019. "Work Hour Mismatch And Job Mobility: Adjustment Channels And Resolution Rates," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 227-242, January.
    7. Fang, Tony & Lin, Carl & Tang, Xueli, 2018. "How Has the Two-Day Weekend Policy Affected Labour Supply and Household Work in China?," IZA Discussion Papers 11698, Institute of Labor Economics (IZA).
    8. Kawata, Keisuke, 2015. "Work hour mismatches and on-the-job search," Economic Modelling, Elsevier, vol. 47(C), pages 280-291.
    9. Geyer, Johannes & Myck, Michal, 2010. "Poorer Health – Shorter Hours? Health and Flexibility of Hours of Work," IZA Discussion Papers 5169, Institute of Labor Economics (IZA).
    10. Sarah Dolfin, 2006. "An examination of firms' employment costs," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 861-878.
    11. Fouarge, D. & Baaijens, F P., 2009. "Job mobility and hours of work: the effect of Dutch legislation," ROA Research Memorandum 004, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    12. KURODA Sachiko & YAMAMOTO Isamu, 2011. "Firm's demand for work hours: Evidence from multi-country and matched firm-worker data," Discussion papers 11024, Research Institute of Economy, Trade and Industry (RIETI).
    13. Stefan Hochguertel, 2010. "Self-Employment around Retirement Age," Tinbergen Institute Discussion Papers 10-067/3, Tinbergen Institute.
    14. Yanying Chen & Yi Jin Tan, 2018. "The effect of non-contributory pensions on labour supply and private income transfers: evidence from Singapore," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-54, December.
    15. Philip Trostel & Ian Walker, 2006. "Education and Work," Education Economics, Taylor & Francis Journals, vol. 14(4), pages 377-399.
    16. Beckmannshagen, Mattis & Schröder, Carsten, 2022. "Earnings inequality and working hours mismatch," Labour Economics, Elsevier, vol. 76(C).
    17. Keisuke Kawata & Mizuki Komura, 2015. "The Gender Division of Labor: A Joint Marriage and Job Search Model," IDEC DP2 Series 5-1, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    18. Mevlut Tatliyer & Nurullah Gur, 2022. "Individualism and Working Hours: Macro-Level Evidence," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(2), pages 733-755, January.
    19. Lalé, Etienne, 2016. "The Evolution of Multiple Jobholding in the U.S. Labor Market: The Complete Picture of Gross Worker Flows," IZA Discussion Papers 10355, Institute of Labor Economics (IZA).
    20. Kuroda, Sachiko & Yamamoto, Isamu, 2013. "Firms’ demand for work hours: Evidence from matched firm-worker data in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 29(C), pages 57-73.
    21. Daly, Moira, 2015. "The long term returns of attempting self-employment with regular employment as a fall back option," Labour Economics, Elsevier, vol. 35(C), pages 26-52.
    22. Schuster, Monica & Vranken, Liesbet & Maertens, Miet, 2017. "You can(’t) always get the job you want: stated versus revealed employment preferences in the Peruvian agro-industry," IOB Working Papers 2017.04, Universiteit Antwerpen, Institute of Development Policy (IOB).
    23. Joseph G. Altonji & Emiko Usui, 2007. "Work Hours, Wages, and Vacation Leave," ILR Review, Cornell University, ILR School, vol. 60(3), pages 408-428, April.
    24. Senesky, Sarah, 2005. "Testing the intertemporal labor supply model: are jobs important?," Labour Economics, Elsevier, vol. 12(6), pages 749-772, December.
    25. Keith A. Bender & John Douglas Skåtun, 2009. "Constrained By Hours And Restricted In Wages: The Quality Of Matches In The Labor Market," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 512-529, July.

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