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Hours and Wages: A Bargaining Approach

Author

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  • Del Rey, Elena
  • Naval, Joaquín
  • Silva, José I.

Abstract

In a recent paper, Bick et al. (2022) show the presence of a hump-shaped relationship between hours and hourly wages with a maximum around 50 hours worked. We show that a model with fixed labor costs where workers and firms bargain in wages and hours can help explain this non-linear relationship. Also, a quantitative version of the model is able to match the empirical hourly-wage to hours worked relationship estimated by those authors for the US.

Suggested Citation

  • Del Rey, Elena & Naval, Joaquín & Silva, José I., 2022. "Hours and Wages: A Bargaining Approach," MPRA Paper 112349, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:112349
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    References listed on IDEAS

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    1. Jeffrey T. Denning & Brian A. Jacob & Lars J. Lefgren & Christian vom Lehn, 2022. "The Return to Hours Worked within and across Occupations: Implications for the Gender Wage Gap," ILR Review, Cornell University, ILR School, vol. 75(5), pages 1321-1347, October.
    2. Noritaka Kudoh & Hiroaki Miyamoto & Masaru Sasaki, 2019. "Employment and Hours over the Business Cycle in a Model with Search Frictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 436-461, January.
    3. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
    4. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    5. Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-963, June.
    6. Silva, José Ignacio & Toledo, Manuel, 2009. "Labor Turnover Costs And The Cyclical Behavior Of Vacancies And Unemployment," Macroeconomic Dynamics, Cambridge University Press, vol. 13(S1), pages 76-96, May.
    7. Yurdagul, Emircan, 2017. "Production complementarities and flexibility in a model of entrepreneurship," Journal of Monetary Economics, Elsevier, vol. 86(C), pages 36-51.
    8. Claudia Goldin, 2014. "A Grand Gender Convergence: Its Last Chapter," American Economic Review, American Economic Association, vol. 104(4), pages 1091-1119, April.
    9. Patricia Cortés & Jessica Pan, 2019. "When Time Binds: Substitutes for Household Production, Returns to Working Long Hours, and the Skilled Gender Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 37(2), pages 351-398.
    10. Andrés Erosa & Luisa Fuster & Gueorgui Kambourov, 2016. "Towards a Micro-Founded Theory of Aggregate Labour Supply," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(3), pages 1001-1039.
    11. John Pencavel, 2015. "The Productivity of Working Hours," Economic Journal, Royal Economic Society, vol. 125(589), pages 2052-2076, December.
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    Cited by:

    1. Saglam, Ismail, 2023. "Exploitation of Collective Bargaining in the Labor Market," MPRA Paper 117588, University Library of Munich, Germany.
    2. Ana I. Moro Egido & Joaquin Naval & Jose I. Silva, 2023. "Part-time hours and wages," ThE Papers 23/06, Department of Economic Theory and Economic History of the University of Granada..
    3. Gilbert Cette & Simon Drapala & Jimmy Lopez, 2023. "The Circular Relationship Between Productivity and Hours Worked: A Long-Term Analysis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(4), pages 650-664, December.

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    More about this item

    Keywords

    Fixed labor costs; wage-hours relationship; bargaining;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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