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"How Many Hours Would you Want to Work a Week?": Job Quality and the Omitted Variables Bias in Labour Supply Models

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Author Info
Nadia Steiber
Abstract

This paper sets out to provide an understanding of how individuals form their preferences over the extent of their paid work involvement - their working time preferences - in different work environments and societal contexts. The main objective of the empirical analysis is to investigate how preferences of this kind are constructed at the individual level and adapted over time following changes in work- and familyrelated circumstances. The consideration of the Old and New Länder of Germany as cases for comparative analysis allows for a test of common factors in different contexts of economic conditions and gender relations. The empirical findings from a longitudinal analysis of the German Socio-Economic Panel (1993-2003) run counter to the predictions of neoclassical labour supply theory. This owes to a fundamental difference in terms of theoretical approach. While (most) economists tend to view paid work in instrumental terms - as something that people perform only for its monetary rewards, this study takes account of intrinsic work rewards as central determinants of work motivation. We find the qualitative experience of work to exert an independent influence on individuals' preferences over work hours, and therefore argue for the inclusion of work quality as a central factor in labour supply decisions.

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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers with number 121.

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Length: 27 p.
Date of creation: 2008
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Handle: RePEc:diw:diwsop:diw_sp121

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Keywords: Labour; labour supply; working hours; preferences; panel data analysis;

Find related papers by JEL classification:
J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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    Other versions:
  2. David A. Spencer, 2006. "Work for all those who want it? Why the neoclassical labour supply curve is an inappropriate foundation for the theory of employment and unemployment," Cambridge Journal of Economics, Oxford University Press, vol. 30(3), pages 459-472, May. [Downloadable!] (restricted)
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    Other versions:
  4. Bluestone, Barry & Rose, Stephen, 1998. "The Macroeconomics of Work Time," Review of Social Economy, Taylor and Francis Journals, vol. 56(4), pages 425-41, Winter.
  5. Andrew E. Clark, 2004. "What makes a good job? Evidence from OECD countries," DELTA Working Papers 2004-28, DELTA (Ecole normale supérieure). [Downloadable!]
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  7. René Böheim & Mark P. Taylor, 2004. "Actual and Preferred Working Hours," British Journal of Industrial Relations, Blackwell Publishers Ltd/London School of Economics, vol. 42(1), pages 149-166, 03. [Downloadable!] (restricted)
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  11. Stewart, M.B. & Swaffield, J.K., 1996. "Constraints on the Desired Hours of Work of British Men," The Warwick Economics Research Paper Series (TWERPS) 468, University of Warwick, Department of Economics.
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  12. Rob Euwals, 2005. "The predictive value of subjective labour supply data: A partial-adjustment model with measurement error," Empirical Economics, Springer, vol. 30(2), pages 309-329, 09. [Downloadable!] (restricted)
  13. Clark, Andrew E., 2001. "What really matters in a job? Hedonic measurement using quit data," Labour Economics, Elsevier, vol. 8(2), pages 223-242, May. [Downloadable!] (restricted)
  14. Richard Blundell & Mike Brewer & Marco Francesconi, 2005. "Job changes, hours changes and the path of labour supply adjustment," IFS Working Papers W05/21, Institute for Fiscal Studies. [Downloadable!]
  15. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
  16. Francis Green & Nicholas Tsitsianis, 2005. "An Investigation of National Trends in Job Satisfaction in Britain and Germany," British Journal of Industrial Relations, Blackwell Publishers Ltd/London School of Economics, vol. 43(3), pages 401-429, 09. [Downloadable!] (restricted)
  17. Miles S. Kimball & Matthew D. Shapiro, 2008. "Labor Supply: Are the Income and Substitution Effects Both Large or Both Small?," NBER Working Papers 14208, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Robert Drago & David Black & Mark Wooden, 2006. "Who Wants Flexibility? Changing Work Hours Preferences and Life Events," Melbourne Institute Working Paper Series wp2006n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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  19. Dickens, William T & Lundberg, Shelly J, 1993. "Hours Restrictions and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 169-92, February. [Downloadable!] (restricted)
    Other versions:
  20. Rob Euwals & Bertrand Melenberg & Arthur van Soest, 1998. "Testing the predictive value of subjective labour supply data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 567-585. [Downloadable!]
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  21. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March. [Downloadable!] (restricted)
  22. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier. [Downloadable!] (restricted)
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  23. Joseph Altonji & Christina Paxson, 1987. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Tradeoffs," Working Papers 594, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  24. Scacciati, Francesco, 2004. "Erosion of purchasing power and labor supply," The Journal of Socio-Economics, Elsevier, vol. 33(6), pages 725-744, December. [Downloadable!] (restricted)
  25. Altman, Morris, 2001. "A behavioral model of labor supply: casting some light into the black box of income-leisure choice," The Journal of Socio-Economics, Elsevier, vol. 30(3), pages 199-219, May. [Downloadable!] (restricted)
  26. Lane, Robert E., 1992. "Work as "disutility" and money as "happiness": Cultural origins of a basic market error," The Journal of Socio-Economics, Elsevier, vol. 21(1), pages 43-64. [Downloadable!] (restricted)
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