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Coordination of Hours within the Firm

Author

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  • Labanca, Claudio

    (Monash University)

  • Pozzoli, Dario

    () (Department of Economics, Copenhagen Business School)

Abstract

Although coworkers are spending an increasing share of their working time interacting with one another, little is known about how the coordination of hours among heterogenous coworkers affects pay, productivity and labor supply. In this paper, we use new linked employer-employee dataon hours worked in Denmark to first document evidence of positive correlations between wages, productivity and the degree of hours coordination - measured as the dispersion of hours - within firms. We then estimate labor supply elasticities by exploiting changes made to the personal income tax schedule in 2010. We find that hours coordination is associated with attenuated labor supply elasticity and spillovers on coworkers not directly affected by the tax change. These spillovers led to a 15% increase in the marginal excess burden from the 2010 tax reform, and if ignored, they induce substantial downward bias in estimates of the labor supply elasticity. We explain these findings in a framework in which differently productive firms choose whether to coordinate hours in exchange for productivity gains, leading more productive firms to select into coordinating hours and to pay compensating wage differentials.

Suggested Citation

  • Labanca, Claudio & Pozzoli, Dario, 2018. "Coordination of Hours within the Firm," Working Papers 7-2018, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2018_007
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    Cited by:

    1. German Cubas & Chinhui Juhn & Pedro Silos, 2018. "Coordinated Work Schedules and the Gender Wage Gap," 2018 Meeting Papers 249, Society for Economic Dynamics.

    More about this item

    Keywords

    skill polarization; skill upgrading; trade integration and labor market frictions;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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