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Research ArticleArticles

Hours Constraints and Wage Differentials across Firms

Claudio Labanca and Dario Pozzoli
Published online before print November 07, 2023, 0822-12479R1; DOI: https://doi.org/10.3368/jhr.0822-12479R1
Claudio Labanca
Claudio Labanca is a Lecturer of Economics at Monash University and a Research Affiliate at IZA ().
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Dario Pozzoli
Dario Pozzoli is MSO Professor of Economics at Copenhagen Business School and a Research Fellow at IZA.
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Abstract

Although constraints on hours worked at the firm-level are viewed as an important determinant of firm wages, little direct evidence exists to support this view. In this paper, we use linked employer-employee data on hours worked in Denmark to measure hours constraints and to investigate how these constraints relate to firm wages. We show that firms with stricter constraints pay higher firm-specific wages and that these premiums are concentrated in more productive firms. Starting from these findings we discuss a framework in which hours constraints are motivated by the productivity gains derived from having a more cooperative production process, leading more productive firms to constrain hours and to pay compensating wage differentials.

JEL Codes:
  • J31
  • J33

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Journal of Human Resources: 58 (6)
Journal of Human Resources
Vol. 58, Issue 6
1 Nov 2023
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Hours Constraints and Wage Differentials across Firms
Claudio Labanca, Dario Pozzoli
Journal of Human Resources Nov 2023, 0822-12479R1; DOI: 10.3368/jhr.0822-12479R1

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Hours Constraints and Wage Differentials across Firms
Claudio Labanca, Dario Pozzoli
Journal of Human Resources Nov 2023, 0822-12479R1; DOI: 10.3368/jhr.0822-12479R1
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Keywords

  • J31
  • J33
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