Hours Determination in the US Labor Market

This paper investigates how work hours are determined in the U.S. labor market and the implications of different firm organizational structures for labor supply and worker welfare. We field a novel representative survey of 1,000 workers and 1,000 managers, matched at the firm level. First, we document heterogeneity in the modes of hours determination, where we expect to show that relatively few workers select their own hours, with decisions instead shaped by constraints set by their employer. We then examine how these modes vary across worker and firm characteristics, testing whether flexibility disproportionately accrues to higher-income workers. Second, we study how hour-setting institutions mediate labor supply elasticities by combining worker choice experiments with manager approval responses, shedding light on why macro and micro labor supply estimates diverge. Finally, we assess the extent and sources of hours mismatch, exploring informational frictions, belief misalignment between workers and managers, and conflicting preferences over hours. Together, our results provide new micro evidence on the determinants of work hours and offer insight into how institutional constraints shape labor supply responses.