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Working time as an investment? The effects of unpaid overtime on wages, promotions and layoffs

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  • Anger, Silke

Abstract

Whereas the number of paid overtime hours declined over the last decade, a different trend can be observed for unpaid overtime work in Germany. We look at the future consequences for overtime workers, and therefore investigate the investment character of working time. We examine whether unpaid extra hours induce a higher likelihood of promotion and pay rise, and whether they reduce the risk of losing the job. Using longitudinal micro data from the GSOEP for the years 1991 to 2002 we find significant positive effects of unpaid overtime work on future payoffs, but also a positive impact on the probability of job loss. Therefore, we find only partial evidence for the investment character of unpaid overtime.

Suggested Citation

  • Anger, Silke, 2005. "Working time as an investment? The effects of unpaid overtime on wages, promotions and layoffs," SFB 649 Discussion Papers 2005-032, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2005-032
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    1. Thomas Bauer & Klaus F. Zimmermann, 1999. "Overtime Work and Overtime Compensation in Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 419-436, September.
    2. David N. F. Bell & Robert A. Hart, 1999. "Unpaid Work," Economica, London School of Economics and Political Science, vol. 66(262), pages 271-290, May.
    3. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May.
    4. Anger, Silke, 2005. "Unpaid Overtime in Germany: Differences between East and West," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 125(1), pages 17-27.
    5. Bell, Linda A. & Freeman, Richard B., 2001. "The incentive for working hard: explaining hours worked differences in the US and Germany," Labour Economics, Elsevier, vol. 8(2), pages 181-202, May.
    6. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
    7. repec:bla:scotjp:v:46:y:1999:i:4:p:419-36 is not listed on IDEAS
    8. Markus Pannenberg, 2005. "Long‐Term Effects Of Unpaid Overtime," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(2), pages 177-193, May.
    9. Bell, David N.F. & Hart, Robert A. & Hübler, Olaf & Schwerdt, Wolfgang, 2000. "Paid and Unpaid Overtime Working in Germany and the UK," IZA Discussion Papers 133, Institute of Labor Economics (IZA).
    10. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2003. "A sticky floors model of promotion, pay, and gender," European Economic Review, Elsevier, vol. 47(2), pages 295-322, April.
    11. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    12. Landers, Renee M & Rebitzer, James B & Taylor, Lowell J, 1996. "Rat Race Redux: Adverse Selection in the Determination of Work Hours in Law Firms," American Economic Review, American Economic Association, vol. 86(3), pages 329-348, June.
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    Cited by:

    1. Veliziotis, Michail, 2010. "Trade unions and unpaid overtime in Britain," ISER Working Paper Series 2010-43, Institute for Social and Economic Research.
    2. Sjögren Lindquist, Gabriella, 2010. "Tournaments and unfair treatment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(6), pages 670-682, December.
    3. Anger, Silke, 2008. "Overtime Work as a Signaling Device," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 55(2), pages 167-189.
    4. 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.
    5. Mario Bossler & Philipp Grunau, 2020. "Asymmetric information in external versus internal promotions," Empirical Economics, Springer, vol. 59(6), pages 2977-2998, December.
    6. Frei, Irina & Grund, Christian, 2017. "Antecedents of Overtime Work: The Case of Junior Academics," IZA Discussion Papers 11065, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    overtime; unpaid work; promotion; wage growth; layoff;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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