Title: The Labor Market Effects of Expanding Overtime Coverage
Abstract: Analysis of the impact of overtime regulations on the labor market has been hindered by a lack of high quality data that can take advantage of useful policy variation. This paper uses changes in state and federal salary thresholds for overtime coverage of salaried employees in the U.S. (2014-2020), in conjunction with high-frequency administrative payroll data, to empirically assess two leading predictions of the effect of overtime: 1) that firms will substitute away from hours per worker in favor of more workers, and 2) a “compensating differentials” mechanism whereby firms would neutralize the effect of overtime via reductions in base pay. The evidence is inconsistent with both views. Using a difference-in-difference design, I show that expansions in overtime coverage lead to a net loss in headcount. At the same time, firms raise base pays in order to keep workers exempt from the new overtime provisions. Compared to effects found from studies on the minimum wage, the gains in income from an expansion in overtime are small relative to the loss in employment. Moreover, the rise in income is largest for jobs paying near the new exemption threshold, whereas the employment loss is greater among lower paying jobs. As a result, expansions in overtime amplify, rather than reduce, inequality.
Quach 교수는 초과 근무의 고용 및 임금 효과에 대한 최신 연구를 발표하고, 노동시장 관련 정책변화의 효과를 추정하는 최신 방법론 등에 대해 논의하였습니다.
5월 19일 대우관 323호에서 경제학과 BK 초청 세미나가 진행되었습니다.
[발표 연사 및 주제]
Title: The Labor Market Effects of Expanding Overtime Coverage
Abstract: Analysis of the impact of overtime regulations on the labor market has been hindered by a lack of high quality data that can take advantage of useful policy variation. This paper uses changes in state and federal salary thresholds for overtime coverage of salaried employees in the U.S. (2014-2020), in conjunction with high-frequency administrative payroll data, to empirically assess two leading predictions of the effect of overtime: 1) that firms will substitute away from hours per worker in favor of more workers, and 2) a “compensating differentials” mechanism whereby firms would neutralize the effect of overtime via reductions in base pay. The evidence is inconsistent with both views. Using a difference-in-difference design, I show that expansions in overtime coverage lead to a net loss in headcount. At the same time, firms raise base pays in order to keep workers exempt from the new overtime provisions. Compared to effects found from studies on the minimum wage, the gains in income from an expansion in overtime are small relative to the loss in employment. Moreover, the rise in income is largest for jobs paying near the new exemption threshold, whereas the employment loss is greater among lower paying jobs. As a result, expansions in overtime amplify, rather than reduce, inequality.
Quach 교수는 초과 근무의 고용 및 임금 효과에 대한 최신 연구를 발표하고, 노동시장 관련 정책변화의 효과를 추정하는 최신 방법론 등에 대해 논의하였습니다.
[행사 포스터]