Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250653 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 14992
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
wage differentials
hours constraints
cooperation
JEL: 
J31
J33
Document Type: 
Working Paper

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