The Economics of Worktime Length, Adjustment, and Flexibility

An electic framework is developed to understand long-term and short-term patterns in worktime, and to explain labor market anomalies such as the downward inflexibility of the workweek and coexistence of underemployment and overemployment. Neoclassical labor demand and supply models focus narrowly on monetary cost and individual welfare consequences. Post-Keynesian, institutionalist and radical political economy paradigms suggest work hours and institutions regulating its adjustment also reflect uncertainty, relative incomes, internal labor markets, custom, power, and effort-regulation. Work hours have three measurable dimensions-mean duration, variability, and dynamic flexibility. Employers seek "numerical flexibility," and households desire minimal conflict with non-worktime activities. If irreconciliable, length and allocation outcomes will be determined by relative bargaining power. Given evidence of imperfect sorting in labor markets according to hours preferences, and that flexible hour arrangements favorably affect productivity or personnel cost (an "efficiency hours" hypothesis), innovative government policies are suggested which would induce firms to better synchronize their aims with diversifying employee preferences.