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The effect of overtime regulations on employment

Author

Listed:
  • Ronald L. Oaxaca

    (University of Arizona, USA, CEPS/INSTEAD, Luxembourg, PRESAGE, France, and IZA, Germany)

  • Galiya Sagyndykova

    (Nazarbayev University, Kazakhstan)

Abstract

Regulation of standard workweek hours and overtime hours and pay can protect workers who might otherwise be required to work more than they would like to at the going rate. By discouraging the use of overtime, such regulation can increase the standard hourly wage of some workers and encourage work sharing that increases employment, with particular advantages for female workers. However, regulation of overtime raises employment costs, setting in motion economic forces that can limit, neutralize, or even reduce employment. And increasing the coverage of overtime pay regulations has little effect on the share of workers who work overtime or on weekly overtime hours per worker.

Suggested Citation

  • Ronald L. Oaxaca & Galiya Sagyndykova, 2020. "The effect of overtime regulations on employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-89, December.
    • Handle: RePEc:iza:izawol:journl:2020:n:89
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    References listed on IDEAS

    as
    1. Thomas Bauer & Klaus F. Zimmermann, 1999. "Overtime Work and Overtime Compensation in Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 419-436, September.
    2. Matthieu Chemin & Etienne Wasmer, 2009. "Using Alsace-Moselle Local Laws to Build a Difference-in-Differences Estimation Strategy of the Employment Effects of the 35-Hour Workweek Regulation in France," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 487-524, October.
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    4. Jennifer Hunt, 1999. "Has Work-Sharing Worked in Germany?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 117-148.
    5. Hart,Robert A., 2004. "The Economics of Overtime Working," Cambridge Books, Cambridge University Press, number 9780521801423, October.
    6. Dominique Goux & Eric Maurin & Barbara Petrongolo, 2014. "Worktime Regulations and Spousal Labor Supply," American Economic Review, American Economic Association, vol. 104(1), pages 252-276, January.
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    8. Stephen J. Trejo, 2003. "Does the Statutory Overtime Premium Discourage Long Workweeks?," ILR Review, Cornell University, ILR School, vol. 56(3), pages 530-551, April.
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    12. David N. F. Bell & Robert A. Hart, 2003. "Wages, Hours, and Overtime Premia: Evidence from the British Labor Market," ILR Review, Cornell University, ILR School, vol. 56(3), pages 470-480, April.
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    15. Pierre Cahuc & Stéphane Carcillo, 2014. "The Detaxation of Overtime Hours: Lessons from the French Experiment," Post-Print hal-03460334, HAL.
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    18. Friesen, Jane, 2001. "Overtime pay regulation and weekly hours of work in Canada," Labour Economics, Elsevier, vol. 8(6), pages 691-720, December.
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    Citations

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    Cited by:

    1. Stéphane Carcillo & Alexander Hijzen & Stefan Thewissen, 2024. "The limitations of overtime limits to reduce long working hours: Evidence from the 2018 to 2021 working time reform in Korea," British Journal of Industrial Relations, London School of Economics, vol. 62(1), pages 98-126, March.
    2. Sagyndykova, Galiya & Oaxaca, Ronald L., 2019. "Raising the Overtime Premium and Reducing the Standard Workweek: Short-Run Impacts on U.S. Manufacturing," IZA Discussion Papers 12557, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    overtime; wages; labor demand; employment;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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