The Relationship between Wages and Weekly Hours of Work: the Role of Division Bias*

as the analytical framework. Despite the many estimates presented in the literature, there is little agreement on a point estimate of the gross effect of the wage rate on weekly hours of work, except that it is generally negative (i.e., the income effect dominates).2 The fact that the wage elasticity is negative has been used to explain the secular decline of hours of work and is important in calculating the labor-supply effects of incomemaintenance programs. As the study by DaVanzo, DeTray, and Greenberg [4] shows, if the emphasis is shifted from weekly hours of work to weeks worked per year, wage elasticities become positive and significant. Finally, if annual hours of work is the focus of the analysis, the inverse relationship between weekly hours and wage rates tends to dominate, creating a negative elasticity of annual hours with respect to wage rates. This paper presents new evidence strongly questioning the result that the elasticity of weekly hours of work with respect to the wage rate is negative. It will be seen that one important factor, acknowledged to exist by most analysts but ignored in much empirical research, may be responsible for the overwhelming number of negative estimates presented in the literature.3 In particular, most of the estimates are based on a measure of the