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Free to choose? Differences in the hours determination of constrained and unconstrained workers

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  • Mark L. Bryan

Abstract

In surveys, large minorities of individuals typically report that they would like to change their weekly working hours at their current hourly wage. If this evidence reflects genuine constraints on choice of hours, the determinants of hours should differ between constrained and unconstrained groups. Controlling for selection by an extension of the Heckman two-step method to ordered selection and panel data, and using a sample of manual men, I find that unconstrained workers' hours are determined differently from those of constrained workers. I present evidence that local labour market conditions affect the hours of constrained but not of unconstrained workers. I also correct for the potential bias resulting from the use of observed hours to derive the hourly wage, by instrumenting it with its lagged value. The combination of ignoring hours constraints and assuming the derived hourly wage is exogenous imparts a downward bias to wage elasticity estimates. Copyright 2007 , Oxford University Press.

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  • Mark L. Bryan, 2007. "Free to choose? Differences in the hours determination of constrained and unconstrained workers," Oxford Economic Papers, Oxford University Press, vol. 59(2), pages 226-252, April.
    • Handle: RePEc:oup:oxecpp:v:59:y:2007:i:2:p:226-252
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    Cited by:

    1. Müller, Kai-Uwe & Neumann, Michael & Wrohlich, Katharina, 2018. "Labor Supply under Participation and Hours Constraints: An Extended Structural Model for Policy Evaluations," IZA Discussion Papers 12003, Institute of Labor Economics (IZA).
    2. Paul, Annemarie, 2015. "After work shopping? Employment effects of a deregulation of shop opening hours in the German retail sector," European Economic Review, Elsevier, vol. 80(C), pages 329-353.
    3. Robin Boadway & Zhen Song & Jean‐François Tremblay, 2017. "Optimal Income Taxation and Job Choice," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(4), pages 910-938, October.
    4. Anne C. Gielen, 2009. "Working hours flexibility and older workers' labor supply," Oxford Economic Papers, Oxford University Press, vol. 61(2), pages 240-274, April.
    5. Fischer, Benjamin & Jessen, Robin & Steiner, Viktor, 2019. "Work incentives and the efficiency of tax-transfer reforms under constrained labor supply," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203607, Verein für Socialpolitik / German Economic Association.
    6. Richard Blundell & Mike Brewer & Marco Francesconi, 2008. "Job Changes and Hours Changes: Understanding the Path of Labor Supply Adjustment," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 421-453, July.
    7. Jeremy E. Reynolds, 2014. "Prevailing Preferences," ILR Review, Cornell University, ILR School, vol. 67(3), pages 1017-1041, July.
    8. Daniel Borowczyk-Martins & Etienne Lalé, 2019. "Employment Adjustment and Part-Time Work: Lessons from the United States and the United Kingdom," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(1), pages 389-435, January.
    9. Catherine SMITH, 2014. "Did the Intergenerational Solidarity Pact increase the employment rate of the elderly in Belgium? A macro-econometric evaluation," LIDAM Discussion Papers IRES 2014009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Juan L. Paramio & José L. Zofío, 2008. "Labor Market Duality and Leisure Industries in Spain: Quality of Life Versus Standard of Living," American Journal of Economics and Sociology, Wiley Blackwell, vol. 67(4), pages 683-717, October.
    11. Fischer, Benjamin & Jessen, Robin & Steiner, Viktor, 2019. "Work incentives and the cost of redistribution via tax-transfer reforms under constrained labor supply," Discussion Papers 2019/10, Free University Berlin, School of Business & Economics.
    12. Carmen Camacho & Fabio Mariani & Luca Pensieroso, 2017. "Illegal immigration and the shadow economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(6), pages 1050-1080, December.
    13. Alpaslan AKAY & Olivier BARGAIN & H. Xavier JARA, 2022. "Experienced versus Decision Utility: Large-Scale Comparison for Income-Leisure Preferences," Bordeaux Economics Working Papers 2022-23, Bordeaux School of Economics (BSE).
    14. Omar Osvaldo Chisari, 2020. "Why do workers buy lottery tickets? A note on gambling, labour contracts and the utility of leisure," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2020-52, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
    15. Andrew Benito & Jumana Saleheen, 2013. "Labour Supply as a Buffer: Evidence from UK Households," Economica, London School of Economics and Political Science, vol. 80(320), pages 698-720, October.
    16. KURODA Sachiko & YAMAMOTO Isamu, 2011. "Firm's demand for work hours: Evidence from multi-country and matched firm-worker data," Discussion papers 11024, Research Institute of Economy, Trade and Industry (RIETI).
    17. Heineck, Guido & Schwarze, Johannes, 2004. "Fly Me to the Moon: The Determinants of Secondary Jobholding in Germany and the UK," IZA Discussion Papers 1358, Institute of Labor Economics (IZA).
    18. Mark L. Bryan & Almudena Sevilla, 2017. "Flexible working in the UK and its impact on couples’ time coordination," Review of Economics of the Household, Springer, vol. 15(4), pages 1415-1437, December.
    19. Muriel Dejemeppe & Catherine Smith & Bruno der Linden, 2015. "Did the Intergenerational Solidarity Pact increase the employment rate of older workers in Belgium? A macro-econometric evaluation," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-23, December.
    20. Alpaslan Akay & Olivier B. Bargain & H. Xavier Jara, 2023. "Experienced versus decision utility: large‐scale comparison for income–leisure preferences," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(4), pages 823-859, October.
    21. Akay, Alpaslan & Bargain, Olivier & Jara Tamayo, H. Xavier, 2023. "Experienced versus decision utility: large-scale comparison for income-leisure preferences," LSE Research Online Documents on Economics 117746, London School of Economics and Political Science, LSE Library.
    22. Eva Gutiérrez-i-Puigarnau & Jos N van Ommeren, 2015. "Commuting and labour supply revisited," Urban Studies, Urban Studies Journal Limited, vol. 52(14), pages 2551-2563, November.
    23. Bryan, Mark L. & Sevilla, Almudena, 2014. "Flexible Working and Couples' Coordination of Time Schedules," IZA Discussion Papers 8304, Institute of Labor Economics (IZA).
    24. 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.
    25. Kai-Uwe Müller & Michael Neumann & Katharina Wrohlich, 2018. "Labor Supply under Participation and Hours Constraints," Discussion Papers of DIW Berlin 1758, DIW Berlin, German Institute for Economic Research.

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