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Compensating Wage Differentials for Mandatory Overtime

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Author Info
Ronald G. Ehrenberg
Paul L. Schumann

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Abstract

Our paper estimates the extent to which employees are compensated for an unfavorable job characteristic, being required to accept mandatory assignment of overtime, by receiving higher straight-time wages. Our estimating equations are derived from a model in which wage rates and the existence of mandatory assignment of overtime are jointly determined in the market by the interaction of employee and employer preferences. While - on average, we do not observe the existence of a compensating wage differential for mandatory overtime, we do observe the existence of such differentials for unionized workers and workers with only a few years experience at a firm. Given any estimated compensating wage differential for an unfavorable working condition, one must decide whether its magnitude is sufficiently large to allow one to conclude that the differential fully compensates workers for the disutility of being subject to the unfavorable working condition. We develop and illustrate a methodology that can be used to answer this question, at least for the case of mandatory overtime provisions and other rules that restrict employees' choice of hours.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0805.

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Date of creation: Feb 1985
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Handle: RePEc:nbr:nberwo:0805

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ronald G. Ehrenberg, 1980. "Retirement system characteristics and compensating wage differentials in the public sector," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 33(4), pages 470-483, July.
  2. John Abowd & Orley Ashenfelter, 1979. "Unemployment and Compensating Wage Differentials," Working Papers 500, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  3. repec:fth:prinin:120 is not listed on IDEAS
  4. Deardorff, Alan V & Stafford, Frank P, 1976. "Compensation of Cooperating Factors," Econometrica, Econometric Society, vol. 44(4), pages 671-84, July. [Downloadable!] (restricted)
  5. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-33, June. [Downloadable!] (restricted)
  6. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, vol. 70(3), pages 355-71, June. [Downloadable!] (restricted)
  7. Brown, Charles & Medoff, James, 1978. "Trade Unions in the Production Process," Journal of Political Economy, University of Chicago Press, vol. 86(3), pages 355-78, June. [Downloadable!] (restricted)
  8. Kim B. Clark, 1980. "The impact of unionization on productivity: A case study," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 33(4), pages 451-469, July.
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  1. Joseph Altonji & Christina Paxson, 1985. "Hours-Wage Tradeoffs and Job Mobility," Working Papers 579, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  2. Ronald G. Ehrenberg, 1989. "Workers' Compensation, Wages, and the Risk of Injury," NBER Working Papers 1538, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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