The Effects of Overtime Pay Regulation on Worker Compensation

Stephen J. Trejo

120 citations0/0 files storedAmerican Economic Review

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Labor market dynamics and wage inequality Labor Law and Work Dynamics Employment, Labor, and Gender Studies

Abstract

Proponents claim that a statutory overtime premium, by raising the relative cost of overtime, may encourage firms to substitute employment for overtime hours. The author argues that there will be no real effects if firms reduce straight-time wages so as to offer the same package of weekly compensation and hours of work that was acceptable initially. Empirical analysis suggests that wage differentials do arise to mitigate the purely demand-driven effects predicted by previous models, but these differentials are not large enough to neutralize overtime pay regulation completely. Copyright 1991 by American Economic Association.

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References

1974Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition 1987Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products 1982The Effect of the Minimum Wage on Employment and Unemployment 1982On the Estimation of Structural Hedonic Price Models 1979Compliance with the Minimum Wage Law 1997Anticipated Unemployment, Temporary Layoffs, and Compensating Wage Differentials 1968Short-Run Employment Variation on Class-I Railroads in the U.S., 1947-1963

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2001The Cyclicality of Real Wages within Employer-Employee Matches 2000The Demand for Hours of Labor: Direct Evidence from California 1998Hours Reductions as Work-Sharing 2000Chapter 12 Health insurance and the labor market 1993Overtime Pay, Overtime Hours, and Labor Unions 2006Government failure versus market failure 2010Improving Workplace Conditions Through Strategic Enforcement

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