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Reducing Hours of Work: Does Overtime Act as a Brake Upon Employment Growth? An Analysis by Gender for the Case of Italy

  • Giannelli, Gianna Claudia

    ()

    (University of Florence)

  • Braschi, Cristina

    ()

    (University of Florence)

In recent years the question of overtime work has become increasingly relevant as part of the wider issue of the reduction in the working day. A direct relation between policies aiming at reducing working hours, and increases in overtime work neutralising their beneficial effects on employment, has been envisaged by those opposing such policies. We investigate this issue using microdata by the Bank of Italy. In Italy, the incidence of overtime work among male dependent workers is relatively high. In particular, we seek to ascertain if, for Italy too, the fear that a reduction in working hours could give rise to a substitution of overtime work for new jobs is legitimate. We estimate the probability of working overtime, together with equations for overtime hours of work, using different econometric models, both for cross-section (probit, tobit) and panel data (conditional fixed effects logit). Among several other variables, we control for wages and normal hours. We are particularly interested in exploring differences by sex. Overtime has always been studied over selected samples of male employees working in the private sector. Of course, focusing on workers who are most likely to work overtime will yield the result of a relatively large “substitution” effect. We show that extending the analysis to a more realistic labour market that includes female workers, this effect may become relatively modest for some specific policy measures. This result is robust across different sampling assumptions and model specifications, thus giving support to the hypothesis that the policies aiming at reducing the normal working day may have positive employment effects.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 557.

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Length: 34 pages
Date of creation: Aug 2002
Date of revision:
Publication status: published as 'Réduire le temps de travail : les heures supplémentaires agissent-elles comme un frein sur la croissance de l’emploi ? Une analyse par genre du cas italien' in: Revue de l’IRES, 2005, 3, 93-127
Handle: RePEc:iza:izadps:dp557
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  1. Jennifer Hunt, 1996. "Has Work-Sharing Worked in Germany?," NBER Working Papers 5724, National Bureau of Economic Research, Inc.
  2. Calmfors, Lars & Hoel, Michael, 1989. "Work Sharing, Employment and Shiftwork," Oxford Economic Papers, Oxford University Press, vol. 41(4), pages 758-73, October.
  3. Frederiksen, Anders & Graversen, Ebbe K. & Smith, Nina, 2001. "Overtime Work, Dual Job Holding and Taxation," IZA Discussion Papers 323, Institute for the Study of Labor (IZA).
  4. Bruno Crepon & Francis Kramarz, 2002. "Employed 40 Hours or Not Employed 39: Lessons from the 1982 Mandatory Reduction of the Workweek," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1355-1389, December.
  5. Ehrenberg, Ronald G., 1971. "Heterogeneous labor, the internal labor market, and the dynamics of the employment-hours decision," Journal of Economic Theory, Elsevier, vol. 3(1), pages 85-104, March.
  6. Bauer, Thomas K. & Zimmermann, Klaus F., 1999. "Overtime Work and Overtime Compensation in Germany," IZA Discussion Papers 48, Institute for the Study of Labor (IZA).
  7. Robert A Hart & Robin J Ruffell, 1992. "The Cost of Overtime Hours in British Production Industries," Working Papers Series 92/1, University of Stirling, Division of Economics.
  8. Pannenberg, Markus & Wagner, Gert G., 2001. "Why Do Overtime Work, Overtime Compensation and the Distribution of Economic Well-Being Evidence for the West Germany and Great Britain," IZA Discussion Papers 318, Institute for the Study of Labor (IZA).
  9. Trejo, Stephen J, 1993. "Overtime Pay, Overtime Hours, and Labor Unions," Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 253-78, April.
  10. Bell, D. & RA Hart, 1999. "Overtime Working in an Unregulated Labour Market," Working Papers Series 9904, University of Stirling, Division of Economics.
  11. Calmfors, Lars & Hoel, Michael, 1988. " Work Sharing and Overtime," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 45-62.
  12. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  13. Trejo, Stephen J, 1991. "The Effects of Overtime Pay Regulation on Worker Compensation," American Economic Review, American Economic Association, vol. 81(4), pages 719-40, September.
  14. Calmfors, Lars, 1985. "Work sharing, employment and wages," European Economic Review, Elsevier, vol. 27(3), pages 293-309.
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