Wages, Hours, and Overtime Premia: Evidence from the British Labor Market

Unlike the United States, Britain has no national laws regulating overtime hour assignment or compensation. Using individual-level data on male non-managerial workers from the 1998 British New Earnings Survey, the authors investigate relationships among the standard hourly wage rate, hourly earnings (including overtime), the overtime premium, and the length of overtime hours. They find that when overtime is accounted for, average hourly wage earnings are fairly uniform across firms in a given industry, because firms paying below-market-level straight-time wages tend to award above-market-level overtime premiums, and, conversely, firms paying above-market-level straight-time wages provide below-market-level overtime premiums.