Arbeitspapier
Why Do Firms Pay an Overtime Premium?
We develop a rationale for the payment by firms of a wage premium on marginal, or overtime, weekly hours. We examine wage-hours contracts within the framework of a two-period specific human capital model with asymmetric information. The wage premium serves to achieve contract efficiency. For those weekly hours for which a premium is paid, worker compensation exceeds the value of marginal product. There is an optimal automatic compensatory differential rule between straight-time wages and the premium, and this provides new theoretical insights into recent empirical work in this area. Implications of imposing mandatory rules for premium pay and hours of work are also assessed.
- Language
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Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 163
Labor Contracts
Compensation Packages; Payment Methods
human capital
asymmetric information
mandatory overtime rules
Überstunden
Arbeitsvertrag
Effizienzlohn
Humankapital
Asymmetrische Information
Unvollständiger Vertrag
Theorie
Ma, Yue
- Handle
- Last update
-
20.09.2024, 8:21 AM CEST
Data provider
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Object type
- Arbeitspapier
Associated
- Hart, Robert A.
- Ma, Yue
- Institute for the Study of Labor (IZA)
Time of origin
- 2000