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Raising the Overtime Premium and Reducing the Standard Workweek: Short-Run Impacts on U.S. Manufacturing

Author

Listed:
  • Sagyndykova, Galiya

    (Nazarbayev University)

  • Oaxaca, Ronald L.

    (University of Arizona)

Abstract

A nine-factor input model is developed to estimate the monthly demand for employment, capital, and weekly hours per worker/workweek in U.S. Manufacturing. The labor inputs correspond to production and non-production workers disaggregated by overtime and non-overtime employment. Policy simulations are conducted to examine the short-run effects on the monthly growth rates for employment, labor earnings, capital usage, and the workweek from either a) raising the overtime premium to double-time, or b) reducing the standard workweek to 35 hours. Although the growth rate policy effects are heterogeneous across disaggregated labor input categories, on aver- age both policy changes exhibit negative effects on the growth rates of industry-wide employment, earnings, and non-labor input usage. The growth rate of the workweek is virtually unaffected by raising the overtime premium but is negatively impacted by reducing the standard work week.

Suggested Citation

  • Sagyndykova, Galiya & Oaxaca, Ronald L., 2019. "Raising the Overtime Premium and Reducing the Standard Workweek: Short-Run Impacts on U.S. Manufacturing," IZA Discussion Papers 12557, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12557
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    References listed on IDEAS

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    1. Francesco Renna, 2006. "Moonlighting and Overtime: A Cross-Country Analysis," Journal of Labor Research, Transaction Publishers, vol. 27(4), pages 575-591, October.
    2. Bruno Crepon & Francis Kramarz, 2002. "Employed 40 Hours or Not Employed 39: Lessons from the 1982 Mandatory Reduction of the Workweek," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1355-1389, December.
    3. 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.
    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.
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    6. repec:iza:izawol:journl:y:2014:p:89 is not listed on IDEAS
    7. 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).
    8. Raposo, Pedro S. & van Ours, Jan C., 2010. "How working time reduction affects jobs and wages," Economics Letters, Elsevier, vol. 106(1), pages 61-63, January.
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    10. David N. F. Bell & Robert A. Hart, 2003. "Wages, Hours, and Overtime Premia: Evidence from the British Labor Market," ILR Review, Cornell University, ILR School, vol. 56(3), pages 470-480, April.
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    Cited by:

    1. Bell, David N.F. & Hart, Robert A., 2019. "The Decline of Overtime Working in Britain," IZA Discussion Papers 12651, Institute of Labor Economics (IZA).
    2. David N. F. Bell & Robert A. Hart, 2023. "The decline of paid overtime working in Britain," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 235-258, June.

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    More about this item

    Keywords

    overtime; employment; workweek;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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