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Overtime Work As A Signaling Device

  • Silke Anger

This paper provides an explanation for the empirically proven relationship between overtime and future benefits. We suggest an internal signaling model, in which a worker signals his value to the employer by supplying unpaid overtime. In our empirical analysis, we examine whether overtime has in fact a signaling component. Variations in collectively bargained hours between industries are exploited, as they imply different overtime thresholds for workers with the same number of actual hours. Using data from the German Socio-Economic Panel Study for the years 1993–2004, a positive signaling value of unpaid overtime is found for West German workers.

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Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 55 (2008)
Issue (Month): 2 (05)
Pages: 167-189

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Handle: RePEc:bla:scotjp:v:55:y:2008:i:2:p:167-189
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  1. Silke Anger, 2005. "Unpaid Overtime in Germany: Differences between East and West," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 125(1), pages 17-27.
  2. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  3. John H. Tyler & Richard J. Murnane & John B. Willett, 2000. "Estimating The Labor Market Signaling Value Of The GED," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 431-468, May.
  4. 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.
  5. Silke Anger, 2005. "Working Time as an Investment? – The Effects of Unpaid Overtime on Wages, Promotions and Layoffs," SFB 649 Discussion Papers SFB649DP2005-032, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  6. Engellandt, Axel & Riphahn, Regina, 2004. "Temporary Contracts and Employee Effort," CEPR Discussion Papers 4178, C.E.P.R. Discussion Papers.
  7. Meyer, Anna & Wallette, Mårten, 2005. "Absence of Absenteeism and Overtime work – Signaling Factors for Temporary Workers?," Working Papers 2005:15, Lund University, Department of Economics.
  8. Massimiliano Bratti, 2007. "Effort-based career opportunities and working time," International Journal of Manpower, Emerald Group Publishing, vol. 28(1), pages 489 - 512, August.
  9. Massimiliano BRATTI & Stefano STAFFOLANI, 2005. "Effort-based career opportunities and working time," Departmental Working Papers 2005-02, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  10. Bell, David N.F. & Hart, Robert A., 2003. "How Important Is Guaranteed or Institutionalised Overtime?," IZA Discussion Papers 766, Institute for the Study of Labor (IZA).
  11. David Campbell & Francis Green, 2002. "The Long Term Pay-Off From Working Longer Hours," Studies in Economics 0205, School of Economics, University of Kent.
  12. Jennifer Hunt, 1999. "Has Work-Sharing Worked In Germany?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 117-148, February.
  13. Sousa-Poza, Alfonso & Ziegler, Alexandre, 2003. "Asymmetric information about workers' productivity as a cause for inefficient long working hours," Labour Economics, Elsevier, vol. 10(6), pages 727-747, December.
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