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3 - The overtime decision

Published online by Cambridge University Press:  22 September 2009

Robert A. Hart
Affiliation:
University of Stirling
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Summary

In this chapter, we investigate the decision to work overtime hours in the workplace. The literature has explored this issue from three different perspectives. These are (a) the overtime supply choice of the individual, (b) the firm's demand for overtime, and (c) worker-firm contractual bargaining agreements over hours of work. Within all three approaches, it is common to accommodate interventions by outside agencies – usually the government, but including industry-level agreed rules and regulations – that effectively impose exogenous constraints on the practice of overtime working. It should be emphasised, however, that supply-dominated studies almost invariably embrace aspects of demand while demand analysis is often extended to admit some degree of supply-side decision making.

Suppose we were to concentrate on an individual's decision to supply hours of work. In the case of overtime, the question arises as to the role played by the wage premium for hours worked in excess of standard hours. This typically involves considerations that lie beyond the usual supply analysis of a participating individual. Leaving aside possible mandatory rules in respect of overtime compensation, payment of a premium for a sub-set of daily working hours implies action by an agent to provide an incentive to work longer hours than would have been the case with only a single rate. It suggests overt intervention to induce, for part of the working day, a substitution effect that overwhelmingly dominates the income effect.

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Publisher: Cambridge University Press
Print publication year: 2004

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  • The overtime decision
  • Robert A. Hart, University of Stirling
  • Book: The Economics of Overtime Working
  • Online publication: 22 September 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511493263.004
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  • The overtime decision
  • Robert A. Hart, University of Stirling
  • Book: The Economics of Overtime Working
  • Online publication: 22 September 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511493263.004
Available formats
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Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • The overtime decision
  • Robert A. Hart, University of Stirling
  • Book: The Economics of Overtime Working
  • Online publication: 22 September 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511493263.004
Available formats
×