Overtime Working and Contract Efficiency

32 Pages Posted: 17 Aug 2013

See all articles by Robert A. Hart

Robert A. Hart

University of Stirling - Department of Economics; Institute for the Study of Labor (IZA)

Yue Ma

City University of Hong Kong (CityUHK) - Department of Economics & Finance

Multiple version iconThere are 3 versions of this paper

Date Written: August 15, 2013

Abstract

We present a wage-hours contract designed to minimize costly turnover given investments in specific training combined with firm and worker information asymmetries. It may be optimal for the parties to work ‘long hours’ remunerated at premium rates for guaranteed overtime hours. Based on British plant and machine operatives, we test three predictions. First, trained workers with longer tenure are more likely to work overtime. Second, hourly overtime pay exceeds the value of marginal product while the basic hourly wage is less than the value of marginal product. Third, the basic hourly wage is negatively related to the overtime premium.

Keywords: Paid overtime, wage-hours contract, plant and machine operatives

JEL Classification: J41, J33

Suggested Citation

Hart, Robert A. and Ma, Yue, Overtime Working and Contract Efficiency (August 15, 2013). Available at SSRN: https://ssrn.com/abstract=2310973 or http://dx.doi.org/10.2139/ssrn.2310973

Robert A. Hart (Contact Author)

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom
+44 1786 467 471 (Phone)
+44 1786 467 469 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Yue Ma

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

HOME PAGE: http://www.cb.cityu.edu.hk/staff/yuema24

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