The Short-Run Impacts of Raising the Overtime Premium or Reducing the Standard Workweek on Employment, Hours, and Earnings in U.S. Manufacturing

Galiya Sagyndykova, Ronald Oaxaca

Research output: Working paper


A nine factor input model is used to obtain the monthly demand for employment and weekly hours in U.S. Manufacturing under long-term profit maximization. The input demand functions correspond to employment and weekly hours of overtime and non-overtime production and non-production workers as well as capital. Model specification incorporates the functional form derived from a Cobb-Douglas production technology with cross-equation restrictions. Data for model estimation are obtained from Current Employment Statistics, Employer Cost for Employee Compensation, Federal Reserve Economic Data, Bureau of Economic Analysis, National Bureau of Economic Research, and Current Population Survey. Policy simulations are conducted to estimate the short-run effects of a) raising the overtime premium to double-time, and b) reducing the standard workweek to 35 hours. The outcome variables are factor specific and total employment, weekly hours, and earnings as well as the employment of capital and the returns to capital.
Original languageEnglish
Publication statusIn preparation - 2017


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