Full Citation

Title: Hours and Wages

Citation Type: Working Paper

Publication Year: 2021

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ISSN:

DOI: 10.3386/w26722

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Abstract: We document two robust features of the cross-sectional distribution of usual weekly hours and hourly wages. First, usual weekly hours are heavily concentrated around 40 hours, while at the same time a substantial share of total hours come from individuals who work more than 50 hours. Second, mean hourly wages are non-monotonic across the usual hours distribution, with a peak at 50 hours. We develop and estimate a model of labor supply to account for these features. The novel feature of our model is that earnings are non-linear in hours, with the extent of nonlinearity varying over the hours distribution. Our estimates imply significant wage penalties for individuals that deviate from 40 hours in either direction, leading to a large mass of individuals that work 40 hours and are not very responsive to shocks. This has important implications for the role of labor supply as a mechanism for self-insurance in a standard heterogeneous agent-incomplete markets model and for empirical strategies designed to estimate labor supply parameters.

Url: https://www.nber.org/papers/w26722

User Submitted?: No

Authors: Bick, Alexander; Blandin, Adam; Rogerson, Richard; Carey, W P

Series Title: NBER Working Paper Series

Publication Number: 26722

Institution: National Bureau of Economic Research

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Publisher Location:

Data Collections: IPUMS USA, IPUMS CPS, IPUMS Time Use - ATUS

Topics: Labor Force and Occupational Structure, Work, Family, and Time

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