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Hours and Wages

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  • Alexander Bick
  • Adam Blandin
  • Richard Rogerson

Abstract

We document two robust features of the cross-sectional distribution of usual weekly hours and hourly wages. First, usual weekly hours are heavily concentrated around 40 hours, while at the same time a substantial share of total hours come from individuals who work more than 50 hours. Second, mean hourly wages are nonmonotonic across the usual hours distribution, with a peak at 50 hours. We develop and estimate a model of labor supply to account for these features. The novel feature of our model is that earnings are nonlinear in hours, with the extent of nonlinearity varying over the hours distribution. Our estimates imply significant wage penalties for people who deviate from 40 hours in either direction, leading to a large mass of people who work 40 hours and are not very responsive to shocks. This has important implications for the role of labor supply as a mechanism for self-insurance in a standard heterogeneous-agent incomplete-markets model and for empirical strategies designed to estimate labor supply parameters.

Suggested Citation

  • Alexander Bick & Adam Blandin & Richard Rogerson, 2022. "Hours and Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 137(3), pages 1901-1962.
  • Handle: RePEc:oup:qjecon:v:137:y:2022:i:3:p:1901-1962.
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    File URL: http://hdl.handle.net/10.1093/qje/qjac005
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    Cited by:

    1. Titan Alon & Matthias Doepke & Jane Olmstead-Rumsey, 2020. "This Time It's Different: The Role of Women's Employment in a Pandemic Recession," Working Papers 2020-057, Human Capital and Economic Opportunity Working Group.
    2. Jeffrey T. Denning & Brian A. Jacob & Lars J. Lefgren & Christian vom Lehn, 2022. "The Return to Hours Worked within and across Occupations: Implications for the Gender Wage Gap," ILR Review, Cornell University, ILR School, vol. 75(5), pages 1321-1347, October.
    3. Paula A. Calvo & Ilse Lindenlaub & Ana Reynoso, 2021. "Marriage Market and Labor Market Sorting," NBER Working Papers 28883, National Bureau of Economic Research, Inc.
    4. Fernández-Val, Iván & Peracchi, Franco & van Vuuren, Aico & Vella, Francis, 2020. "Hours Worked and the U.S. Distribution of Real Annual Earnings 1976–2016," IZA Discussion Papers 13016, Institute of Labor Economics (IZA).
    5. Iv'an Fern'andez-Val & Franco Peracchi & Aico van Vuuren & Francis Vella, 2020. "Hours Worked and the U.S. Distribution of Real Annual Earnings 1976-2019," Papers 2002.11211, arXiv.org, revised Nov 2021.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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