The long term pay-off from working longer hours

Abstract

Using data from the first six waves of the British Household Panel Survey,
we estimate the impact of working longer hours over 1991 to 1995 on 1996
wages. We find that there are positive but diminishing long-term returns,
with the returns becoming negative beyond 47 hours for women and 59
hours for men. The returns are greater at the margin for “unpaid” hours than
for “paid” hours. Evaluated at the mean, an extra unpaid hour over 1991 to
1995 raised 1996 pay by 4 percent, an extra paid hour by 1 percent. It also
pays off to work longer hours than the norm for the industry. While there
are no significant differences between the marginal effects for men and
women, conditional on hours worked the incentives are greater for women
than for men. These findings are consistent with the possibility that
increasing UK wage inequality is associated with an upward impact on work
hours.