Bilateral Bargaining and Working Hours Mismatches

For decades, there has been a persistent gap between the working hours employees want and the hours they actually work. Although policies have been introduced to strengthen employees' legal rights to adjust their working hours, many still struggle with working too many or too few hours. A matching and searching model has been developed to explain how negotiations between workers and firms influence these mismatches. Increasing workers' bargaining power is not a panacea, as it may shift the problem from overwork to underwork. The difference between desired and actual working hours decreases when workers and firms have equal negotiating power.