Volume 27, Number 4 (Fall) 1992
Kahn, Shulamit and Kevin Lang. 1992. "Constraints on the Choice of Work Hours: Agency versus Specific-Capital." Journal of Human Resources 27(4):661-678.
Lifetime contracts imply that at a given time, wages and value of marginal product (VMP) will diverge. The contract will 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. If hours are set efficiently, workers will face binding hours constraints. The agency model and the firm-specific capital models make opposite predictions regarding the relation between work hours constraints and job tenure. We test these predictions. Our results indicate that neither model explains the observed pattern of hours constraints.
Shulamit Kahn is an assistant professor of finance and economics in the School of Management at Boston University and a researcher at the National Bureau of Economic Research. Kevin Lang is a professor of economics at Boston University and a researcher at the National Bureau of Economic Research. This work was supported in part by NSF Grant no. SES-8707422 and by the Olin Fellowship held by Kevin Lang at the National Bureau of Economic Research. The authors are grateful to Rachel Friedberg for able research assistance and to Lorne Carmichael, William Dickens, Ronald Ehrenberg, Henry Farber, Paul Hunt, Lawrence Katz, Michael Piore, Laura Tyson, an anonymous referee, and participants in workshops at Boston University, Harvard, MIT, and the National Bureau of Economic Research Labor Studies Group for helpful comments.
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