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Constraints on Hours within the Firm

Author

Listed:
  • Claudio Labanca
  • Dario Pozzoli

Abstract

Firms often impose constraints on working hours. While many believe that these constraints shape labor supply decisions, little evidence exists to support such views. We explore this relationship using linked employer-employee data on hours worked and the variation in tax rates derived from the 2010 Danish tax reform. We show that hours worked are unresponsive to individual tax changes in firms with strict constraints, whereas they respond to these changes, directly and through spillovers, in firms with looser constraints. Starting from these findings, we discuss the determinants of hours constraints, distinguishing between firms’ technologies and coordination of hours among coworkers.

Suggested Citation

  • Claudio Labanca & Dario Pozzoli, 2022. "Constraints on Hours within the Firm," Journal of Labor Economics, University of Chicago Press, vol. 40(2), pages 473-503.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/714827
    DOI: 10.1086/714827
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    Citations

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    Cited by:

    1. David Jinkins & Elira Kuka & Claudio Labanca, 2025. "Welfare Programs and Crime Spillovers," NBER Working Papers 33926, National Bureau of Economic Research, Inc.
    2. Kabir Dasgupta & Brenden J. Mason, 2025. "The Effect of Liquidity Constraints on Labor Supply: Evidence from Interest Rate Ceilings," Finance and Economics Discussion Series 2025-110, Board of Governors of the Federal Reserve System (U.S.).
    3. Ian M. Schmutte & Meghan M. Skira, 2025. "The Response of Firms to Maternity Leave and Sickness Absence," Journal of Human Resources, University of Wisconsin Press, vol. 60(6), pages 2125-2167.
    4. Green, Colin P. & Heywood, John S., 2022. "Does Performance Pay Influence Hours of Work?," IZA Discussion Papers 15474, IZA Network @ LISER.
    5. Jose Garcia-Louzao & Ruben Perez-Sanz, 2025. "Women’s voice at work and family-friendly firms," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 16(3), pages 699-717, December.
    6. Kuhn, Moritz & Luo, Jinfeng & Manovskii, Iourii & Qiu, Xincheng, 2023. "Coordinated firm-level work processes and macroeconomic resilience," Journal of Monetary Economics, Elsevier, vol. 137(C), pages 107-127.
    7. Bassier, Ihsaan & Gautham, Leila, 2025. "The firm-pay gender gap and formal sector churn over the life cycle," Journal of Development Economics, Elsevier, vol. 176(C).
    8. Spencer Bastani, 2025. "The marginal value of public funds: a brief guide and application to tax policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(4), pages 919-956, August.
    9. Michele Battisti & Ryan Michaels & Choonsung Park, 2024. "Labor Supply within the Firm," Journal of Labor Economics, University of Chicago Press, vol. 42(2), pages 511-548.
    10. Henrik Kleven & Claus Kreiner & Kristian Larsen & Jakob Søgaard, 2023. "Micro vs Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort," Working Papers 2023-15, Princeton University. Economics Department..
    11. Takano, Tetsuaki, 2025. "Intensive and extensive margins of labor adjustment with non-regular employment," Journal of Macroeconomics, Elsevier, vol. 86(C).
    12. Hans Schytte Sigaard, 2022. "Labor Supply Responsiveness to Tax Reforms," Economics Working Papers 2022-04, Department of Economics and Business Economics, Aarhus University.
    13. Bastani, Spencer, 2023. "The marginal cost of public funds: A brief guide," Working Paper Series 2023:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    14. Shao, Lin & Sohail, Faisal & Yurdagul, Emircan, 2023. "Are working hours complements in production?," Journal of Economic Dynamics and Control, Elsevier, vol. 153(C).
    15. Sigaard, Hans Schytte, 2023. "Estimating labor supply responses to Danish tax reforms," Journal of Public Economics, Elsevier, vol. 224(C).

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