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University of Stirling


Working Paper

Overtime Working and Contract Efficiency

Hart RA & Ma Y (2013) Overtime Working and Contract Efficiency. Stirling Economics Discussion Paper, 2013-07.

We present a wage-hours contract designed to minimize costly turnover given investments in specific training combined with firm and worker information asymmetries. It may be optimal for the parties to work ‘long hours' remunerated at premium rates for guaranteed overtime hours. Based on British plant and machine operatives, we test three predictions. First, trained workers with longer tenure are more likely to work overtime. Second, hourly overtime pay exceeds the value of marginal product while the basic hourly wage is less than the value of marginal product. Third, the basic hourly wage is negatively related to the overtime premium.

Paid overtime, wage-hours contract, plant and machine operatives

JEL codes
J41, J33

AuthorsHart Robert A, Ma Yue
Title of seriesStirling Economics Discussion Paper
Number in series2013-07
Publication date05/2013
Date of public distribution05/2013
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