Title page 1

Contents 1

Abstract 3

1. Introduction 4

2. Background 6

3. Theoretical Framework 8

3.1. Supply 8

3.2. Production technology 9

3.2.1. Full observability of worker productivity 9

3.2.2. Eliciting worker types via a reference point with prior beliefs 11

3.2.3. Eliciting worker types via a reference point without prior beliefs 13

4. Empirical Differences in Hours and Wages 16

4.1. Data 16

4.2. Hours and Wages by Gender Across Countries and Over Time 17

4.3. Decomposing Wage Gaps by Hours Regimes 21

4.4. Wage Gaps and labour market institutions, the case of unions 25

5. Conclusions 27

References 29

Appendix 31

A1. Appendix 1 31

A2. Appendix 2 - Estimates of wage elasticities 35

A3. Appendix 3 - Sectors and occupations versus our job definition 38

Figures 5

Figure 1. Hours worked and wage gap, by gender and country 5

Figure 2. Optimal supply of hours 10

Figure 3. Simulated population supply of hours and the covariance between α and δ 11

Figure 4. Hourly wage supplied with productivity 14

Figure 5. Modal hours worked by country over time 18

Figure 6. Changes in labor force participation, by hours regime, country, and gender over time 20

Figure 7. Wage gaps by hours regime over time 20

Figure 8. Conditional returns (compared with full-time work) 22

Figure 9. Oaxaca wage decomposition by hours regime 24

Figure 10. Wage gap decomposition and share female 25

Figure 11. Return to working more than full time and union density 26

Figure 12. Gender gap in return to working more than full time and union density 26

Appendix Tables 31

Table A1. Summary statistics for men and women across different periods and countries 31

Table A2. Occupations by Pay Category 32

Table A3. Classification of industries 32

Table A4. Distribution of occupations and industries (selected years) 33

Table A5. Hours elasticity 36

Table A6. Comparing Oaxaca decompositions using occupation and sectors or jobs 38

Appendix Figures 33

Figure A1. Regression adjusted wage gaps by hours regime over time 33

Figure A2. Conditional returns (compared with modal hours) 34

Figure A3. Estimated wage elasticity 37