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How is the worker’s weekly hour related to wage over the life cycle? The U.S. evidence

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  • Madhu S. Mohanty
  • Aria Golestani

Abstract

The current study estimates the relationship between weekly hours and weekly wage over the life cycle of a representative sample of workers. Recognizing the endogeneity of these two variables, the study estimates both equations in a simultaneous equations framework and demonstrates that the relationship between weekly hours and weekly wage is not uniform over the worker’s life cycle. These two variables are negatively related when the workers are young and have a positive relationship when they are matured adults. This conclusion remains valid for both men and women. Our robustness check further confirms that workers respond to wage increases differently at different stages of their working career. This has interesting policy implications. Any policy to influence the worker’s hours decision through wage incentive must consider the stage of his/her working career.

Suggested Citation

  • Madhu S. Mohanty & Aria Golestani, 2017. "How is the worker’s weekly hour related to wage over the life cycle? The U.S. evidence," Applied Economics, Taylor & Francis Journals, vol. 49(26), pages 2532-2544, June.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:26:p:2532-2544
    DOI: 10.1080/00036846.2016.1243210
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    Cited by:

    1. Mohanty, Madhu, 2019. "Effects of job satisfaction on the worker's wage and weekly hours: A simultaneous equations approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 79(C), pages 27-42.

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