Wage Premium for Overtime Work

A Comparative Analysis of Gender and Changes Over Time

Abstract

This study investigates the wage premium associated with long working hours in Japan and its evolution over time, focusing on gender disparities. Using data from the Basic Survey on Wage Structure between 1998 and 2022, the analysis reveals that workers who engage in longer overtime hours tend to earn higher hourly wages. This overtime wage premium has increased in recent years, suggesting a growing valuation of long working hours within workplaces. Several mechanisms may explain this trend : ⑴ jobs with long overtime hours may involve higher handover costs, making overtime work more valuable ; ⑵ unobserved traits such as work motivation may correlate positively with overtime ; and ⑶ managers and clients may assign more work to high-performing employees, resulting in longer hours and higher pay. While women receive a premium for overtime work compared to men, the gap in premiums has declined over time. Furthermore, although the overall gender wage gap has narrowed, women still earn significantly less than their male counterparts, even within the same workplace. The findings suggest that organizational norms that reward long working hours, coupled with occupational gender segregation, play a central role in perpetuating wage inequalities.