LONG‐TERM EFFECTS OF UNPAID OVERTIME

Why do people work unpaid overtime? Using data from the German Socio‐Economic Panel, we show that remarkable long‐term labour earnings gains are associated with unpaid overtime in West Germany. A descriptive analysis suggests that over a 10‐year period workers with unpaid overtime experience on average at least a 10 percentage points higher increase in real labour earnings than their co‐workers. Applying panel data models this result generally holds. Furthermore, we find some evidence for gender specific differences with respect to the effects of unpaid overtime worked. Our results point to the importance of investment in current working hours beyond the standard work week to enhance real earnings prospects.