Shirking or Productive Schmoozing: Wages and the Allocation of Time at Work

Major strands of recent macroeconomic theory hinge on the relation of workers' efforts to their wages, but there has been no direct general evidence on this relation. This study uses data from household surveys for 1975 and 1981 that include detailed time diaries to examine how changes in the use of time on the job affect wages. Additional time spent by the average worker relaxing at work has no impact on earnings (and is presumably unproductive). Additional on-the- job leisure does raise earnings of workers whose break time is very short. Only among union workers, for whom additional leisure time (in unscheduled breaks only) appears productive, does this pattern differ. The results suggest that further growth in on-the-job leisure will reduce productivity (output per hour paid-for), that monitoring workers can yield returns to the firm, but that entirely eliminating breaks is counterproductive.