Publication type
Journal Article
Authors
Publication date
June 1, 2010
Abstract:
This paper offers a contract-based theory to explain the determination of standard hours, overtime hours and overtime premium pay. We expand on the wage contract literature that emphasises the role of firm-specific human capital and that explores problems of contract efficiency in the face of information asymmetries between the firm and the worker. We first explore a simple wage-hours contract without overtime and show that incorporating hours into the contract may itself produce efficiency gains. We then show how the introduction of overtime hours, remunerated at premium rates, can further improve contract efficiency. Our modelling outcomes in respect of the relationship between the overtime premium and the standard wage rate relate closely to earlier developments in hedonic wage theory. Throughout, we emphasise the intuitive reasoning behind the theory and we also supply relevant empirical evidence. Mathematical derivations are provided in an appendix.
Published in
Labour Economics
Volume
Volume: 17 (1):170-179
DOI
http://dx.doi.org/10.1016/j.labeco.2009.04.002
Subjects
Notes
Previously 'In press, corrected proof' 21 Apr. 2009
Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*
#512313