In response to situations where employers set working hours that may be longer than employees prefer, governments often intervene by regulating work hours through legislation. These laws, which can impose maximum limits, directly constrain the choices available to both employees and employers, effectively limiting the feasible set of combinations for hours and goods.

Government Regulation of Working Hours

A key unrealistic aspect of the individual choice model is that it often overlooks the power of employers in setting work schedules. In many real-world situations, companies, not employees, determine the length of the working day, and they may require hours that are longer than what workers would ideally choose based on their personal preferences.

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A significant limitation of the standard work-leisure model is its core assumption that individuals have complete freedom to choose their working hours. In practice, this choice is often severely constrained by external factors, such as the power of employers to set schedules and the existence of government regulations on work hours.

Inflexibility of Working Hours in Reality

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

CORE Econ - The Economy 2.0: Microeconomics

A fundamental question regarding economic models is whether a model that ignores how people actually think can be a good model of how they choose. Given that models often rely on unrealistic assumptions—such as conscious mathematical optimization and complete flexibility—this problem explores how such abstract frameworks can still be useful for understanding real-world economic behavior.

The Usefulness of Unrealistic Economic Models

Despite individual workers often having limited direct control over their schedules, long-term changes in working hours can still reflect their collective preferences. This indirect influence is exerted through several channels, such as political action, where workers as voters can support parties that legislate on work hours, and collective bargaining, where trade unions negotiate for contracts with provisions like higher overtime pay to discourage excessively long workdays.

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