Alternative Economic Approaches to Analyzing Hours of Work Regulation and Reform

LAW AND ECONOMICS: ALTERNATIVE ECONOMIC APPROACHES TO LEGAL AND REGULATORY ISSUES, Margaret Oppenheimer, Nicholas Mercuro, eds., M.E. Sharpe, Inc., pp. 286-307, 2005

Posted: 22 Jan 2010

Date Written: 2005

Abstract

In the United States there has been a rise in the number of hours worked by individuals relative to other developed countries. This could be leading to an oversupply in labor, that is both overwork, where long hours can have adverse consequences on health and safety, and overemployment, where workers are willing to trade income for reduced work hours but cannot. The conventional neoclassical model, which assumes workers base number of hours worked on market wage rate and their preferences for leisure, provide a starting point on which to build a richer model-income-targeting behavior which suggest the individuals seek market work sufficient to support their pre-established goals regarding consumption and nonmarket time. Factors that could be contributing to increased hours include stagnation of real hourly wage rates, the rise in relative income inequality, single parent families, consumer debt-to-income ratios, and shifting work by employers to "exempt" jobs with unregulated hours. There also seems to be a persistent inability to reduce hours worked even if the workers would prefer to. Given the existence of overemployment, legislation which restricts hours worked can serve to enhance the welfare of workers by closing the gap between work schedules and workers' preferences. However if workers voluntarily work long hours this legislation will increase the welfare of the community by diminishing overwork at the expense of the individual. Thus underlying social and economic sources behind preferences must be addressed by labor laws and regulations.

Keywords: United States, Work regulation, Reform, Work Hours, Labour supply, Overwork

JEL Classification: K12

Suggested Citation

Altman, Morris, Alternative Economic Approaches to Analyzing Hours of Work Regulation and Reform (2005). LAW AND ECONOMICS: ALTERNATIVE ECONOMIC APPROACHES TO LEGAL AND REGULATORY ISSUES, Margaret Oppenheimer, Nicholas Mercuro, eds., M.E. Sharpe, Inc., pp. 286-307, 2005. Available at SSRN: https://ssrn.com/abstract=1539785

Morris Altman (Contact Author)

University of Newcastle ( email )

University Drive
Callaghan, NSW 2308
Australia

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