Hours and Wages

Dec. 14, 2021 - Alexander Bick, Adam Blandin, and Richard Rogerson

Citation: Bick, Alexander, Adam Blandin, and Richard Rogerson.  Hours and Wages.  Quarterly Journal of Economics, Forthcoming.  

Research Summary:

In a recent study, we found that while full-time workers earn much more than those who work part-time, people who work more than 50 hours per week earn only slightly more than those who work full-time (40 hours per week). According to our model, workers’ average productivity peaks at around 40 hours and is lower for shorter or longer hours of work. Indeed, roughly half of U.S. workers now report they log a 40-hour work week. 

Our predictions: most workers prefer to work 40 hours a week (when their productivity is highest) and are then less less likely to adjust their hours in response to shocks. In terms of tax policy design, our findings run counter to textbook models of labor supply. While these suggest most people will work less when faced with higher income tax rates, our model suggests that many full-time workers will not respond.