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Do Labor Markets Provide Enough Short Hour Jobs? An Analysis of Work Hours and Work Incentives

  • James B. Rebitzer
  • Lowell J. Taylor

This paper examines the role that work incentives play in the determination of work hours. Following previous research by Lang (1989), we use a conventional efficiency wage model to analyze how firms respond to worker preferences regarding wage-hours packages. We find that when workers are homogeneous, the role of worker preferences in determining work hours is similar to the simple neoclassical model of labor supply. For instance, if worker preferences shift in favor of shorter hours, firms will respond by offering jobs entailing shorter hours. When workers have heterogeneous preferences, however, employers will want to use a worker's hours preferences as a signal for the responsiveness of the worker to the work incentives used by the firm, and workers in turn may not reveal their hours preferences. Our key finding in this instance is that the labor market equilibrium may be characterized by a sub-optimal number of short-hour jobs. This shortage of short-hour jobs is likely to be found in high wage labor markets.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3883.

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Date of creation: Oct 1991
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Publication status: published as Economic Inquiry, Vol. 33, no. 2 (1995): 257-273.
Handle: RePEc:nbr:nberwo:3883
Note: LS
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  1. Joseph G. Altonji & Christina H. Paxson, 1987. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Tradeoffs," NBER Working Papers 2121, National Bureau of Economic Research, Inc.
  2. Kahn, Shulamit & Lang, Kevin, 1991. "The Effect of Hours Constraints on Labor Supply Estimates," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 605-11, November.
  3. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
  4. Levine, David I, 1991. "Just-Cause Employment Policies in the Presence of Worker Adverse Selection," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 294-305, July.
  5. Lang, Kevin, 1989. "Why was there mandatory retirement?," Journal of Public Economics, Elsevier, vol. 39(1), pages 127-136, June.
  6. Dickens, William T & Lundberg, Shelly J, 1993. "Hours Restrictions and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 169-92, February.
  7. Summers, Lawrence H. & Dickens, William T. & Katz, Lawrence F. & Lang, Kevin, 1989. "Employee Crime and the Monitoring Puzzle," Scholarly Articles 3645199, Harvard University Department of Economics.
  8. Claudia Goldin, 1990. "Understanding the Gender Gap: An Economic History of American Women," NBER Books, National Bureau of Economic Research, Inc, number gold90-1, October.
  9. Joseph Altonji & Christina Paxson, 1985. "Job Characteristics and Hours of Work," Working Papers 578, Princeton University, Department of Economics, Industrial Relations Section..
  10. James B. Rebitzer & Lowell J. Taylor, 1991. "Work Incentives and the Demand for Primary and Contingent Labor," NBER Working Papers 3647, National Bureau of Economic Research, Inc.
  11. Shulamit Kahn & Kevin Lang, 1987. "Constraints on the Choice of Work Hours: Agency vs. Specific-Capital," NBER Working Papers 2238, National Bureau of Economic Research, Inc.
  12. Akerlof, George A & Katz, Lawrence F, 1989. "Workers' Trust Funds and the Logic of Wage Profiles," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 525-36, August.
  13. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  14. Bulow, Jeremy I & Summers, Lawrence H, 1986. "A Theory of Dual Labor Markets with Application to Industrial Policy,Discrimination, and Keynesian Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 376-414, July.
  15. Shulamit B. Kahn & Kevin Lang, 1995. "The Causes of Hours Constraints: Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 914-28, November.
  16. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
  17. Levine, David I, 1989. "Just-Cause Employment Policies When Unemployment Is a Worker Discipline Device," American Economic Review, American Economic Association, vol. 79(4), pages 902-05, September.
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