How are the hours of work affected by regulations? : White-collar exemption and ‘name-only’ store manager in Japan

This paper examines whether overtime regulations have a significant impact on hours worked and hourly wages, focusing on so-called “name-only managers,” a category of employees recently in the news in Japan. The term “name-only manager” refers to an employee who has essentially the same salary and authority as other employees, but who is designated by the company as a manager to exempt them from overtime regulations and make them ineligible for overtime pay. Since the only difference is in the applicable regulations on working time as its name implies, we can identify the impact of regulations on hours worked and hourly wages by comparing “name-only managers” with other employees. Using longitudinal data from 2004 to 2008, we derive the matching estimates for the average difference in hours worked and hourly wages between the employees who are exempt from overtime regulations in the service sector and those who are not. The estimation results indicate no significant difference in equivalent hourly wage or hours worked. That is, even if “name-only managers” have to work longer without overtime pay, it is likely that their base salaries are sufficiently higher to compensate for the loss of overtime pay. This finding supports the fixed-job model.