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Constraints on the Choice of Work Hours: Agency Versus Specific-Capital

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  • Shulamit Kahn
  • Kevin Lang

Abstract

Lifetime contracts imply that at a given time, wages and value of marginal product (VMP) will diverge. The contract will specify hours as well as wages, since firms will desire to prevent workers from working more when the wage is greater than VMP and from working less when the wage is less than VMP. If hours are set efficiently, workers will face binding hours constraints. The agency model and the firm-specific capital models make opposite predictions regarding the relation between work hours constraints and job tenure. We test these predictions. Our results indicate that neither model explains the observed pattern of hours constraints.

Suggested Citation

  • Shulamit Kahn & Kevin Lang, 1992. "Constraints on the Choice of Work Hours: Agency Versus Specific-Capital," Journal of Human Resources, University of Wisconsin Press, vol. 27(4), pages 661-678.
    • Handle: RePEc:uwp:jhriss:v:27:y:1992:i:4:p:661-678
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    Citations

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    Cited by:

    1. Denise J. Doiron, 2003. "Is Under‐Employment due to Labour Hoarding? Evidence from the Australian Workplace Industrial Relations Survey," The Economic Record, The Economic Society of Australia, vol. 79(246), pages 306-323, September.
    2. Michael C. Knaus & Steffen Otterbach, 2019. "Work Hour Mismatch And Job Mobility: Adjustment Channels And Resolution Rates," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 227-242, January.
    3. Anne C. Gielen, 2009. "Working hours flexibility and older workers' labor supply," Oxford Economic Papers, Oxford University Press, vol. 61(2), pages 240-274, April.
    4. Kessing, Sebastian G. & Konrad, Kai A., 2005. "Union Strategy and Optimal Income Taxation," IZA Discussion Papers 1545, Institute of Labor Economics (IZA).
    5. Hart, Robert A. & Ma, Yue, 2010. "Wage-hours contracts, overtime working and premium pay," Labour Economics, Elsevier, vol. 17(1), pages 170-179, January.
    6. Fouarge, D. & Baaijens, F P., 2009. "Job mobility and hours of work: the effect of Dutch legislation," ROA Research Memorandum 004, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    7. KURODA Sachiko & YAMAMOTO Isamu, 2011. "Firm's demand for work hours: Evidence from multi-country and matched firm-worker data," Discussion papers 11024, Research Institute of Economy, Trade and Industry (RIETI).
    8. Lin, Dajun & Lutter, Randall & Ruhm, Christopher J., 2018. "Cognitive performance and labour market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 121-135.
    9. Sousa-Poza, Alfonso & Ziegler, Alexandre, 2003. "Asymmetric information about workers' productivity as a cause for inefficient long working hours," Labour Economics, Elsevier, vol. 10(6), pages 727-747, December.
    10. Gautam Bose & Kevin Lang, 2011. "A Theory of Monitoring and Internal Labor Markets," Discussion Papers 2012-06, School of Economics, The University of New South Wales.
    11. Yi-Ping Tseng & Mark Wooden, 2005. "Preferred vs Actual Working Hours in Couple Households," Melbourne Institute Working Paper Series wp2005n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    12. Bell, David N.F. & Hart, Robert A., 2010. "Retire Later or Work Harder?," IZA Discussion Papers 4720, Institute of Labor Economics (IZA).
    13. Joseph G. Altonji & Emiko Usui, 2007. "Work Hours, Wages, and Vacation Leave," ILR Review, Cornell University, ILR School, vol. 60(3), pages 408-428, April.
    14. Drolet, Marie & Morissette, Rene, 1997. "Travailler plus? Travailler moins? Que preferent les travailleurs canadiens?," Direction des études analytiques : documents de recherche 1997104f, Statistics Canada, Direction des études analytiques.
    15. Hart, Robert A. & Ma, Yue, 2013. "Overtime Working and Contract Efficiency," IZA Discussion Papers 7560, Institute of Labor Economics (IZA).
    16. Martinez-Granado, Maite, 2005. "Testing labour supply and hours constraints," Labour Economics, Elsevier, vol. 12(3), pages 321-343, June.
    17. Paul S. Carlin, 2001. "Evidence on the Volunteer Labor Supply of Married Women," Southern Economic Journal, John Wiley & Sons, vol. 67(4), pages 801-824, April.
    18. Usui, Emiko, 2009. "Wages, non-wage characteristics, and predominantly male jobs," Labour Economics, Elsevier, vol. 16(1), pages 52-63, January.
    19. Hart, Robert A. & Ma, Yue, 2000. "Why Do Firms Pay an Overtime Premium?," IZA Discussion Papers 163, Institute of Labor Economics (IZA).
    20. Li, Haizheng & Zax, Jeffrey S., 2003. "Labor supply in urban China," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 795-817, December.

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