We characterize work hour constraints in the labor market and quantify welfare gains to workers from moving from their current hours to their optimal hours. There is a firm component to work hours that explains approximately 27% of the overall variability in hours. Contrary to predictions from established models of work hours determination, there is no detectable sorting between in worker preferences for longer hours and employer hour requirements. Using a revealed preference approach, we find that workers are off their labor supply curve, on average. The typical worker has an inelastic labor supply and prefers firms that offer more hours. Workers are willing to trade off 9% of earnings on average to move from their current employer to an employer that offers the ideal hours, at a given wage level.
Joint paper with Marta Lachowska, Alex Mas and Steve Woodbury.