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The Long Term Pay-Off From Working Longer Hours

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  • David Campbell
  • Francis Green

Abstract

Using data from the first six waves of the British Household Panel Survey, we estimate the impact of working longer hours over 1991 to 1995 on 1996 wages. We find that there are positive but diminishing long-term returns, with the returns becoming negative beyond 47 hours for women and 59 hours for men. The returns are greater at the margin for "unpaid" hours than for "paid" hours. Evaluated at the mean, an extra unpaid hour over 1991 to 1995 raised 1996 pay by 4 percent, an extra paid hour by 1 percent. It also pays off to work longer hours than the norm for the industry. While there are no significant differences between the marginal effects for men and women, conditional on hours worked the incentives are greater for women than for men. These findings are consistent with the possibility that increasing UK wage inequality is associated with an upward impact on work hours.

Suggested Citation

  • David Campbell & Francis Green, 2002. "The Long Term Pay-Off From Working Longer Hours," Studies in Economics 0205, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:0205
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    File URL: https://www.kent.ac.uk/economics/repec/0205.pdf
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    References listed on IDEAS

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    1. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(1), pages 47-64, Spring.
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    5. Linda Bell & Richard Freeman, 1994. "Why Do Americans and Germans Work Different Hours?," NBER Working Papers 4808, National Bureau of Economic Research, Inc.
    6. Bell, Linda A. & Freeman, Richard B., 2001. "The incentive for working hard: explaining hours worked differences in the US and Germany," Labour Economics, Elsevier, vol. 8(2), pages 181-202, May.
    7. Landers, Renee M & Rebitzer, James B & Taylor, Lowell J, 1996. "Rat Race Redux: Adverse Selection in the Determination of Work Hours in Law Firms," American Economic Review, American Economic Association, vol. 86(3), pages 329-348, June.
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    Cited by:

    1. Veliziotis, Michail, 2010. "Trade unions and unpaid overtime in Britain," ISER Working Paper Series 2010-43, Institute for Social and Economic Research.
    2. Gregg, Paul & Grout, Paul A. & Ratcliffe, Anita & Smith, Sarah & Windmeijer, Frank, 2011. "How important is pro-social behaviour in the delivery of public services?," Journal of Public Economics, Elsevier, vol. 95(7), pages 758-766.
    3. Frei, Irina & Grund, Christian, 2017. "Antecedents of Overtime Work: The Case of Junior Academics," IZA Discussion Papers 11065, Institute of Labor Economics (IZA).
    4. Anger, Silke, 2008. "Overtime Work as a Signaling Device," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 55(2), pages 167-189.
    5. Gustavsson, Magnus, 2013. "Permanent versus transitory wage differentials and the inequality-hours hypothesis," Economics Letters, Elsevier, vol. 121(3), pages 537-541.
    6. Mevlut Tatliyer & Nurullah Gur, 2022. "Individualism and Working Hours: Macro-Level Evidence," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(2), pages 733-755, January.
    7. Alexis Ioannides & Eleni Oxouzi & Stavros Mavroudeas, 2014. "All work and no … pay? Unpaid overtime in Greece: determining factors and theoretical explanations," Industrial Relations Journal, Wiley Blackwell, vol. 45(1), pages 39-55, January.

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    More about this item

    Keywords

    long hours; wage inequality;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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