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Constraints on the Choice of Work Hours: Agency Versus Specific-Capital

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  • Shulamit Kahn
  • Kevin Lang

Abstract

Lifetime contracts imply that at a given time, wages and value of marginal product (VMP) will diverge. The contract will specify hours as well as wages, since firms will desire to prevent workers from working more when the wage is greater than VMP and from working less when the wage is less than VMP. If hours are set efficiently, workers will face binding hours constraints. The agency model and the firm-specific capital models make opposite predictions regarding the relation between work hours constraints and job tenure. We test these predictions. Our results indicate that neither model explains the observed pattern of hours constraints.

Suggested Citation

  • Shulamit Kahn & Kevin Lang, 1992. "Constraints on the Choice of Work Hours: Agency Versus Specific-Capital," Journal of Human Resources, University of Wisconsin Press, vol. 27(4), pages 661-678.
  • Handle: RePEc:uwp:jhriss:v:27:y:1992:i:4:p:661-678
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    Citations

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    Cited by:

    1. Kessing, Sebastian G. & Konrad, Kai A., 2005. "Union strategy and optimal income taxation
      [Gewerkschaftsstrategie und optimale Einkommensteuer]
      ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2005-04, Social Science Research Center Berlin (WZB).
    2. repec:eee:labeco:v:51:y:2018:i:c:p:121-135 is not listed on IDEAS
    3. Hart, Robert A & Ma, Yue, 2013. "Overtime Working and Contract Efficiency," SIRE Discussion Papers 2013-121, Scottish Institute for Research in Economics (SIRE).
    4. Martinez-Granado, Maite, 2005. "Testing labour supply and hours constraints," Labour Economics, Elsevier, vol. 12(3), pages 321-343, June.
    5. Knaus, Michael C. & Otterbach, Steffen, 2016. "Work Hour Mismatch and Job Mobility: Adjustment Channels and Resolution Rates," IZA Discussion Papers 9735, Institute for the Study of Labor (IZA).
    6. Lin, Dajun & Lutter, Randall & Ruhm, Christopher J., 2018. "Cognitive performance and labour market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 121-135.
    7. Usui, Emiko, 2009. "Wages, non-wage characteristics, and predominantly male jobs," Labour Economics, Elsevier, vol. 16(1), pages 52-63, January.
    8. Fouarge Didier & Baaijens Christine, 2009. "Job Mobility and hours of work: the effect of Dutch legislation," ROA Research Memorandum 004, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    9. Gautam Bose & Kevin Lang, 2011. "A Theory of Monitoring and Internal Labor Markets," NBER Working Papers 17623, National Bureau of Economic Research, Inc.
    10. 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).
    11. 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.
    12. 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.
    13. Yi-Ping Tseng & Mark Wooden, 2005. "Preferred vs Actual Working Hours in Couple Households," Melbourne Institute Working Paper Series wp2005n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    14. Joseph G. Altonji & Emiko Usui, 2007. "Work Hours, Wages, and Vacation Leave," ILR Review, Cornell University, ILR School, vol. 60(3), pages 408-428, April.
    15. Martinez-Granado, Maite, 1999. "Testing labour supply and hours constraints," UC3M Working papers. Economics 6106, Universidad Carlos III de Madrid. Departamento de Economía.
    16. Li, Haizheng & Zax, Jeffrey S., 2003. "Labor supply in urban China," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 795-817, December.

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