Constraints on the Choice of Work Hours: Agency vs. Specific-Capital / Shulamit Kahn, Kevin Lang.

Format:

Book

Author/Creator:

Kahn, Shulamit.

Contributor:

National Bureau of Economic Research.

Lang, Kevin.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2238.

NBER working paper series no. w2238

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Constraints on the Choice of Work Hours

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1987.

Summary:

Most models of implicit lifetime contracts imply that at any particular point in time, workers' wages and value of marginal product (VMP) will diverge. As a result, the contract will have to specify hours as well as wages, since firms will desire to prevent workers from working more when the wage is greater than VMP and from working less when the wage is less than VMP. this divergence, combined with the fact that in efficient contracts, the hours are set so that VMP equals the marginal value of leisure, implies that workers will face binding hours constraints. We show that the two major models of lifetime contracts, the agency model and the firm-specific capital model, make opposite predictions regarding the relation between work hours constraints and job tenure. We test these predictions. Our results indicate that neither model of efficient long-term contracts explains the observed pattern of hours constraints. Therefore, we briefly consider other explanations.

Notes:

Print version record

May 1987.