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Does the Statutory Overtime Premium Discourage Long Workweeks?

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  • Stephen J. Trejo

Abstract

Using a pooled data set consisting of 20 annual observations on each of 11 major industry groups, the author estimates the effects of overtime pay regulation on weekly work schedules. In an analysis that controls for workweek trends within industries, the sharp expansions in overtime pay coverage resulting from legislative amendments and Supreme Court decisions are found to have had no discernible impact on overtime hours. This finding is consistent with a model of labor market equilibrium in which straight-time hourly wages adjust to neutralize the statutory overtime premium.

Suggested Citation

  • Stephen J. Trejo, 2003. "Does the Statutory Overtime Premium Discourage Long Workweeks?," ILR Review, Cornell University, ILR School, vol. 56(3), pages 530-551, April.
    • Handle: RePEc:sae:ilrrev:v:56:y:2003:i:3:p:530-551
    DOI: 10.1177/001979390305600310
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    References listed on IDEAS

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    1. Dora L. Costa, 2000. "Hours of Work and the Fair Labor Standards Act: A Study of Retail and Wholesale Trade, 1938–1950," ILR Review, Cornell University, ILR School, vol. 53(4), pages 648-664, July.
    2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    3. Parks, Richard W., 1980. "On the estimation of multinomial logit models from relative frequency data," Journal of Econometrics, Elsevier, vol. 13(3), pages 293-303, August.
    4. Trejo, Stephen J, 1991. "The Effects of Overtime Pay Regulation on Worker Compensation," American Economic Review, American Economic Association, vol. 81(4), pages 719-740, September.
    5. Daniel S. Hamermesh & Stephen J. Trejo, 2000. "The Demand for Hours of Labor: Direct Evidence from California," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 38-47, February.
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    Cited by:

    1. Pierre Cahuc & Stéphane Carcillo, 2014. "The Detaxation of Overtime Hours: Lessons from the French Experiment," SciencePo Working papers Main hal-03460334, HAL.
    2. HASEBE Takuya & KONISHI Yoshifumi & SHIN Kong Joo & MANAGI Shunsuke, 2018. "White Collar Exemption: Panacea for long work hours and low earnings?," Discussion papers 18002, Research Institute of Economy, Trade and Industry (RIETI).
    3. repec:aia:aiaswp:wp22 is not listed on IDEAS
    4. Ronald L. Oaxaca & Galiya Sagyndykova, 2020. "The effect of overtime regulations on employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-89, December.
    5. Christine Jolls, 2007. "Employment Law and the Labor Market," NBER Working Papers 13230, National Bureau of Economic Research, Inc.
    6. repec:hal:spmain:info:hdl:2441/1aeo7h7o569ilqjt5db064dfm3 is not listed on IDEAS
    7. Andrew Figura, 2004. "Workweek flexibility and hours variation," Finance and Economics Discussion Series 2004-59, Board of Governors of the Federal Reserve System (U.S.).
    8. KURODA Sachiko & YAMAMOTO Isamu, 2009. "How are Hours Worked and Wages Affected by Labor Regulations?: The white-collar exemption and 'name-only managers' in Japan," Discussion papers 09031, Research Institute of Economy, Trade and Industry (RIETI).
    9. Quach, Simon, 2020. "The Labor Market Effects of Expanding Overtime Coverage," MPRA Paper 100613, University Library of Munich, Germany.
    10. Kuroda, Sachiko & Yamamoto, Isamu, 2012. "Impact of overtime regulations on wages and work hours," Journal of the Japanese and International Economies, Elsevier, vol. 26(2), pages 249-262.
    11. Anthony Barkume, 2010. "The Structure of Labor Costs with Overtime Work in U.S. Jobs," ILR Review, Cornell University, ILR School, vol. 64(1), pages 128-142, October.
    12. Dora L. Costa, 2000. "Hours of Work and the Fair Labor Standards Act: A Study of Retail and Wholesale Trade, 1938–1950," ILR Review, Cornell University, ILR School, vol. 53(4), pages 648-664, July.
    13. repec:spo:wpmain:info:hdl:2441/1aeo7h7o569ilqjt5db064dfm3 is not listed on IDEAS
    14. Martins, Pedro S., 2016. "Can Overtime Premium Flexibility Promote Employment? Firm- and Worker-Level Evidence from a Labour Law Reform," IZA Discussion Papers 10205, Institute of Labor Economics (IZA).
    15. Pierre Cahuc & Stéphane Carcillo, 2014. "The Detaxation of Overtime Hours: Lessons from the French Experiment," SciencePo Working papers hal-03460334, HAL.
    16. Long-Hwa Chen & Wei-Chung Wang, 2011. "The impact of the overtime policy reform-evidence from the low-paid workers in Taiwan," Applied Economics, Taylor & Francis Journals, vol. 43(1), pages 75-90.
    17. Pierre Cahuc & Stéphane Carcillo, 2014. "The Detaxation of Overtime Hours: Lessons from the French Experiment," Journal of Labor Economics, University of Chicago Press, vol. 32(2), pages 361-400.
    18. Pierre Cahuc & Stéphane Carcillo, 2014. "The Detaxation of Overtime Hours: Lessons from the French Experiment," Post-Print hal-03460334, HAL.
    19. Kawaguchi, Daiji & Naito, Hisahiro & Yokoyama, Izumi, 2017. "Assessing the effects of reducing standard hours: Regression discontinuity evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 43(C), pages 59-76.
    20. van Kranenburg, H.L., 2005. "Relevant market and pricing behavior of regional newspapers in the Netherlands," Research Memorandum 026, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    21. 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.
    22. Riffat Bhutto, 2015. "Extended Work Overtime: Labors (Employees) Choice or Obligation," South Asian Journal of Management Sciences (SAJMS), Iqra University, Iqra University, vol. 9(2), pages 63-68, Fall.
    23. Martins, Pedro S., 2017. "Economic effects of overtime premium flexibility: Firm- and worker-level evidence from a law reform," GLO Discussion Paper Series 102, Global Labor Organization (GLO).

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    More about this item

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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