IDEAS home Printed from https://ideas.repec.org/p/hhs/uulswp/2013_012.html
   My bibliography  Save this paper

Permanent versus Transitory Wage Differentials and the Inequality-Hours Hypothesis

Author

Listed:
  • Gustavsson, Magnus

    (Uppsala Center for Labor Studies)

Abstract

This paper disentangles the effect of inequality in permanent and transitory wages on hours worked by, first, estimating the two components for Swedish industries and, second, using the resulting estimates as explanatory variables in an hours-worked equation. Consistent with Bell and Freeman’s (2001) inequality-hours hypothesis, permanent wage differentials are found to have a positive effect on individuals’ hours of work while transitory wage differentials have no effect. However, the analysis also shows that, in estimated hours-worked equations, inequality in observed wages is potentially a good approximation for inequality in permanent wages.

Suggested Citation

  • Gustavsson, Magnus, 2013. "Permanent versus Transitory Wage Differentials and the Inequality-Hours Hypothesis," Working Paper Series, Center for Labor Studies 2013:12, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uulswp:2013_012
    as

    Download full text from publisher

    File URL: http://www.ucls.nek.uu.se/digitalAssets/199/199868_201312.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard B. Freeman & Birgitta Swedenborg & Robert Topel, 2010. "Reforming the Welfare State: Recovery and Beyond in Sweden," NBER Books, National Bureau of Economic Research, Inc, number free05-1, May.
    2. Bell, Linda A. & Freeman, Richard B., 2001. "The incentive for working hard: explaining hours worked differences in the US and Germany," Labour Economics, Elsevier, vol. 8(2), pages 181-202, May.
    3. Peter Kuhn & Fernando Lozano, 2005. "The Expanding Workweek? Understanding Trends in Long Work Hours Among U.S. Men, 1979-2004," NBER Working Papers 11895, National Bureau of Economic Research, Inc.
    4. Matz Dahlberg & Magnus Gustavsson, 2008. "Inequality and Crime: Separating the Effects of Permanent and Transitory Income," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(2), pages 129-153, April.
    5. David Campbell & Francis Green, 2002. "The Long Term Pay-Off From Working Longer Hours," Studies in Economics 0205, School of Economics, University of Kent.
    6. Freeman, Richard B. & Swedenborg, Birgitta & Topel, Robert H. (ed.), 2010. "Reforming the Welfare State," National Bureau of Economic Research Books, University of Chicago Press, number 9780226261928, December.
    7. Peter Fredriksson & Robert H. Topel, 2010. "Wage Determination and Employment in Sweden Since the Early 1990s: Wage Formation in a New Setting," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 83-126, National Bureau of Economic Research, Inc.
    8. Silke Anger, 2008. "Overtime Work As A Signaling Device†," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(2), pages 167-189, May.
    9. Meghir, Costas & Pistaferri, Luigi, 2011. "Earnings, Consumption and Life Cycle Choices," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 9, pages 773-854, Elsevier.
    10. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053.
    11. Anger, Silke, 2008. "Overtime Work as a Signaling Device," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 55(2), pages 167-189.
    12. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2003. "A sticky floors model of promotion, pay, and gender," European Economic Review, Elsevier, vol. 47(2), pages 295-322, April.
    13. 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, vol. 15(3), pages 409-423.
    14. Stuart S. Rosenthal & William C. Strange, 2008. "Agglomeration and Hours Worked," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 105-118, February.
    15. Peter Kuhn & Fernando Lozano, 2008. "The Expanding Workweek? Understanding Trends in Long Work Hours among U.S. Men, 1979-2006," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 311-343, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Alexis Ioannides & Eleni Oxouzi & Stavros Mavroudeas, 2014. "All work and no … pay? Unpaid overtime in Greece: determining factors and theoretical explanations," Industrial Relations Journal, Wiley Blackwell, vol. 45(1), pages 39-55, January.
    3. Carr, Michael D., 2011. "Work hours and wage inequality: Evidence from the 2004 WERS," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(4), pages 417-427, August.
    4. Mario Bossler & Philipp Grunau, 2020. "Asymmetric information in external versus internal promotions," Empirical Economics, Springer, vol. 59(6), pages 2977-2998, December.
    5. Fernando Lozano, 2010. "Understanding the workweek of foreign born workers in the United States," Review of Economics of the Household, Springer, vol. 8(1), pages 83-104, March.
    6. Frei, Irina & Grund, Christian, 2017. "Antecedents of Overtime Work: The Case of Junior Academics," IZA Discussion Papers 11065, Institute of Labor Economics (IZA).
    7. Emmanuel Saez & Benjamin Schoefer & David Seim, 2019. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," American Economic Review, American Economic Association, vol. 109(5), pages 1717-1763, May.
    8. Mr. Ruy Lama & Juan Pablo Medina Guzman, 2015. "Fiscal Consolidation During Times of High Unemployment: The Role of Productivity Gains and Wage Restraint," IMF Working Papers 2015/262, International Monetary Fund.
    9. Fernando A Lozano, 2011. "The Flexibility Of The Workweek In The United States: Evidence From The Fifa World Cup," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 512-529, April.
    10. Dora Gicheva, 2013. "Working Long Hours and Early Career Outcomes in the High-End Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 31(4), pages 785-824.
    11. Kristina Nyström & Gulzat Elvung, 2014. "New firms and labor market entrants: Is there a wage penalty for employment in new firms?," Small Business Economics, Springer, vol. 43(2), pages 399-410, August.
    12. Egebark, Johan & Kaunitz, Niklas, 2018. "Payroll taxes and youth labor demand," Labour Economics, Elsevier, vol. 55(C), pages 163-177.
    13. Saez, Emmanuel & Schoefer, Benjamin & Seim, David, 2021. "Hysteresis from employer subsidies," Journal of Public Economics, Elsevier, vol. 200(C).
    14. Rasmus Landersø & James J. Heckman, 2017. "The Scandinavian Fantasy: Sources of Intergenerational Mobility in Denmark and the US," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(1), pages 178-230, January.
    15. Ricardo Manuel Santos, 2014. "Dynamic Effects of Labor Supply: a mechanism explaining cross-sectional differences in hours," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 630-653, October.
    16. Zapf, Ines, 2015. "Individual and workplace-specific determinants of paid and unpaid overtime work in Germany," IAB-Discussion Paper 201515, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    17. Genda, Yuji & Kuroda, Sachiko & Ohta, Souichi, 2015. "Does downsizing take a toll on retained staff? An analysis of increased working hours in the early 2000s in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 36(C), pages 1-24.
    18. Gustavsson, Magnus, 2017. "Is Job Polarization a Recent Phenomenon? Evidence from Sweden, 1950–2013, and a Comparison to the United States," Working Paper Series 2017:14, Uppsala University, Department of Economics.
    19. Egebark, Johan & Kaunitz, Niklas, 2013. "Do payroll tax cuts raise youth employment?," Working Paper Series 2013:27, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    20. Elisabetta Magnani, 2012. "Older Workers' Training Opportunities in Times of Workplace Innovation," Working Papers 201205, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.

    More about this item

    Keywords

    labor supply; wage dispersion; wage dynamics;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:uulswp:2013_012. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Katarina Grönvall (email available below). General contact details of provider: https://edirc.repec.org/data/nekuuse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.