Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272991 
Year of Publication: 
2022
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2022-47
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper uses Canadian matched employer-employee data to show that working hours are gross complements in production rather than perfect substitutes, as is typically assumed. We exploit within-establishment and individual-level variation in hours and wages to document novel evidence consistent with complementarities in hours worked. Next, we estimate an elasticity of substitution in working hours of 0.69 in the aggregate and between 0.52 and 1.04 at the industry level. We validate our estimates by showing that industries with higher elasticities exhibit greater flexibility in hours. Our findings have important implications for research on labor supply and the efficacy of policies that aim to influence it.
Subjects: 
Labour markets
Economic models
JEL: 
E23
J22
J23
J31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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