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Why Do Overtime Work, Overtime Compensation and the Distribution of Economic Well-Being Evidence for the West Germany and Great Britain

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  • Pannenberg, Markus

    (Bielefeld University of Applied Sciences)

  • Wagner, Gert G.

    (Max Planck Institute for Human Development)

Abstract

Using panel data for West Germany and Great Britain, we show that there are striking differences in overtime work and overtime compensation in the two countries in the 1990s. Our estimates reveal that the observed overtime patterns affect both the evolution of the monthly labour earnings distribution and individual economic well-being differently in West Germany and Great Britain. Besides varying labour market institutions in the two countries a higher incidence of a combination of performance-related pay and unpaid overtime in Great Britain is an important factor in explaining the observed differences. With regards to West Germany, we show that the current policy of transforming paid overtime in "working time accounts", which is conducted in the spirit of "work-sharing", is neither beneficial for employed workers in terms of income mobility, nor in terms of overall job satisfaction nor in terms of working time preferences.

Suggested Citation

  • Pannenberg, Markus & Wagner, Gert G., 2001. "Why Do Overtime Work, Overtime Compensation and the Distribution of Economic Well-Being Evidence for the West Germany and Great Britain," IZA Discussion Papers 318, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp318
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    References listed on IDEAS

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    Cited by:

    1. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December.
    2. Zapf, Ines, 2015. "Individual and workplace-specific determinants of paid and unpaid overtime work in Germany," IAB-Discussion Paper 201515, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Reizer, Balázs, 2022. "Employment and Wage Consequences of Flexible Wage Components," Labour Economics, Elsevier, vol. 78(C).
    4. Jürgen Schupp & Gert G. Wagner, 2002. "Maintenance of and Innovation in Long-Term Panel Studies: The Case of the German Socio-Economic Panel (GSOEP)," Discussion Papers of DIW Berlin 276, DIW Berlin, German Institute for Economic Research.
    5. Giannelli, Gianna Claudia & Braschi, Cristina, 2002. "Reducing Hours of Work: Does Overtime Act as a Brake Upon Employment Growth? An Analysis by Gender for the Case of Italy," IZA Discussion Papers 557, Institute of Labor Economics (IZA).
    6. Christian Pfeifer, 2015. "Effective working hours and wages: the case of downward adjustment via paid absenteeism," Economics Bulletin, AccessEcon, vol. 35(1), pages 612-626.
    7. Bernard, Darren & Burgstahler, David & Kaya, Devrimi, 2018. "Size management by European private firms to minimize proprietary costs of disclosure," Journal of Accounting and Economics, Elsevier, vol. 66(1), pages 94-122.
    8. Rob Euwals, 2002. "The Predictive Value of Subjective Labour Supply Data: A Dynamic Panel Data Model with Measurement Error," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 D1-3, International Conferences on Panel Data.
    9. Euwals, Rob, 2002. "The Predictive Value of Subjective Labour Supply Data: A Dynamic Panel Data Model with Measurement Error," CEPR Discussion Papers 3121, C.E.P.R. Discussion Papers.
    10. Zapf, Ines & Weber, Enzo, 2017. "The role of employer, job and employee characteristics for flexible working time : An empirical analysis of overtime work and flexible working hours' arrangements," IAB-Discussion Paper 201704, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Euwals, Rob, 2001. "The Predictive Value of Subjective Labour Supply Data: A Dynamic Panel Data Model with Measurement Error," IZA Discussion Papers 400, Institute of Labor Economics (IZA).
    12. Ines Zapf, 2015. "Individual and Workplace-Specific Determinants of Paid and Unpaid Overtime Work in Germany," SOEPpapers on Multidisciplinary Panel Data Research 771, DIW Berlin, The German Socio-Economic Panel (SOEP).

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    More about this item

    Keywords

    Overtime; wage inequality; economic well-being; semi-parametric; decomposition technique; panel data;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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