Minimum Hours Constraints: The Role of Organizational Culture

We develop a model in which minimum hours constraints (MHC) arise due to both the characteristics of the production function and managerial attitudes. The importance of the organizational culture can be deduced from the correlation between the MHC faced by core tasks personnel and by administrative workers. The tasks performed by administrative workers, such as secretaries, accountants, and HR specialists, are similar across firms. If organizational culture played no role in the origination of MHC, the MHC for administrative workers should be independent of the MHC for core tasks personnel. We test the prediction of our model using the Structure of Earnings Survey data from 19 European countries. We find that across all economic sectors and countries, non-administrative workers are significantly more likely to face MHC in firms with rigid MHC for administrative workers. The explanatory power of our proxy for organizational culture is comparable to that of sector fixed effects. We also find that a culture of rigid working hours is more common in small and medium-sized firms, and in firms with a low share of young managers.