Why do firms pay an overtime premium?

Robert A. Hart; Yue Ma

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.

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Year of publication:	2000
Authors:	Hart, Robert A. ; Ma, Yue
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Overtime premium \| human capital \| asymmetric information \| mandatory overtime rules \| Überbeschäftigung \| Overemployment \| Arbeitsvertrag \| Labour contract \| Effizienzlohn \| Efficiency wages \| Humankapital \| Human capital \| Asymmetrische Information \| Asymmetric information \| Unvollständiger Vertrag \| Incomplete contract \| Theorie \| Theory

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Extent:	Online-Ressource ([3], 22, IX S.) graph. Darst.
Series:	Discussion paper series / IZA. - Bonn : IZA, ZDB-ID 2120053-1. - Vol. 163
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Notes:	Systemvoraussetzungen: PDF-Reader
Other identifiers:	hdl:10419/21005 [Handle]
Classification:	J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets ; J33 - Compensation Packages; Payment Methods
Source:	ECONIS - Online Catalogue of the ZBW

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