TY - JOUR

T1 - Effective working hours and wages

T2 - the case of downward adjustment via paid absenteeism

AU - Pfeifer, Christian

PY - 2015

Y1 - 2015

N2 - This paper compares contractual with effective working hours and wages, respectively. Effective working hours are defined as contractual working hours minus absent working hours. This approach takes into account workers' downward adjustment of working time via paid absent eeism if working time constraints are present, which induce workers to accept contracts with larger than their optimal choice of working hours. A German personnel data set, which contains precise information on wages as well as working and absence hours, is used to assess the impact of such downward adjustment on wage inequality and wage differentials by gender, schooling, and age. The main results are: (1) Wage inequality is lower for effective than for contractual wages. (2) The gender gap in effective hourly wages is more than one percentage point smaller than the gender gap in contractual wages, because women are on average more absent than men. (3) Workers with lower school ing are more absent, which leads to an upward bias in estimatesfor rates of return to schooling when contractual instead of effective wages are used. (4) Older workers are more absent so that contractual age-earnings profiles are significantly flatter than effective age-earnings profiles.

AB - This paper compares contractual with effective working hours and wages, respectively. Effective working hours are defined as contractual working hours minus absent working hours. This approach takes into account workers' downward adjustment of working time via paid absent eeism if working time constraints are present, which induce workers to accept contracts with larger than their optimal choice of working hours. A German personnel data set, which contains precise information on wages as well as working and absence hours, is used to assess the impact of such downward adjustment on wage inequality and wage differentials by gender, schooling, and age. The main results are: (1) Wage inequality is lower for effective than for contractual wages. (2) The gender gap in effective hourly wages is more than one percentage point smaller than the gender gap in contractual wages, because women are on average more absent than men. (3) Workers with lower school ing are more absent, which leads to an upward bias in estimatesfor rates of return to schooling when contractual instead of effective wages are used. (4) Older workers are more absent so that contractual age-earnings profiles are significantly flatter than effective age-earnings profiles.

KW - Economics

M3 - Journal articles

VL - 35

SP - 612

EP - 626

JO - Economics Bulletin

JF - Economics Bulletin

SN - 1545-2921

IS - 1

ER -