Off the clock? Working time misperceptions and labour market outcomes

This paper documents a gap between workers' formal working time arrangements and their own reports of them, and examines what this gap reveals about informal working time flexibility. Combining administrative and survey data at the individual level, we construct a new and unique data set which shows that nearly 20% of the workforce mistakenly report that they work under day contracts, with no monitoring of hours, while they are actually paid through a standard hours contract. This reveals that many workers with various profiles may be misinformed about the legal environment governing something as fundamental as their working time. We show that these misreporting workers differ from classic workers in terms of working conditions: they perform more unpaid overtime hours but have a higher wage rate per contractual hour, so that their true compensation per hour worked is similar. Working time rules appear not to be fully applied to misreporters, but we find no evidence that employers use the discrepancy to extract rents. Non-compliance seems to operate as an informal working time arrangement facilitating a gradual transition between standard hours contracts and day contracts.