The Effect of Lower Hours of Work on Wages and Employment

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The Effect of Lower Hours of Work on Wages and Employment

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G Houpis

Abstract

This paper examines the likely effects of a reduction in hours of work employment and wages. We firstly assume that the wage is fixed and present evidence on the direct employment effect of a fall in hours of work. We then analyze the indirect effect on employment from a change in the hourly wage when this is determined endogenously. Our results suggest that reductions in hours of work are not likely to lead to an increase in the hourly wage and will therefore reduce unemployment by sharing any given volume of work among more people. These findings are robust to a number of alternative assumptions about wage and hours determination.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0131.

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Date of creation: Mar 1993
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Handle: RePEc:cep:cepdps:dp0131

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Jennifer Hunt, 1996. "Has Work-Sharing Worked in Germany?," NBER Working Papers 5724, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Hunt, Jennifer, 1997. "Has Work Sharing Worked in Germany?," CEPR Discussion Papers 1553, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Jennifer Hunt, 1999. "Has Work-Sharing Worked In Germany?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 117-148, February. [Downloadable!] (restricted)
Jennifer Hunt, 1996. "The Response of Wages and Actual Hours Worked to the Reductions of Standard Hours," NBER Working Papers 5716, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Yu-Fu Chen & Michael Funke, 2004. "Working Time and Employment under Uncertainty," Quantitative Macroeconomics Working Papers 20409, Hamburg University, Department of Economics. [Downloadable!]
Other versions:
- Yu-Fu Chen & Michael Funke, 2002. "Working Time and Employment under Uncertainty," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
- Yu-Fu Chen & Michael Funke, 2004. "Working Time and Employment Under Uncertainty," Studies in Nonlinear Dynamics & Econometrics, Berkeley Electronic Press, vol. 8(3). [Downloadable!]
Kapteyn, A. & Kalwij, A. & Zaidi, A., 2000. "The myth of worksharing," Discussion Paper 23, Tilburg University, Center for Economic Research. [Downloadable!]
Other versions:
- Kapteyn, Arie & Kalwij, Adriaan S. & Zaidi, Asghar, 2000. "The Myth of Worksharing," IZA Discussion Papers 188, Institute for the Study of Labor (IZA). [Downloadable!]
- Kapteyn, A. & Kalwij, A. & Zaidi, A., 2000. "The Myth of Worksharing," Economics Series Working Papers 9932, University of Oxford, Department of Economics.
- Arie Kapteyn & Adriaan Kalwij & Asghar Zaidi, 2000. "The Myth of Worksharing," Economics Series Working Papers 032, University of Oxford, Department of Economics. [Downloadable!]
- Kapteyn, Arie & Kalwij, Adriaan & Zaidi, Asghar, 2004. "The myth of worksharing," Labour Economics, Elsevier, vol. 11(3), pages 293-313, June. [Downloadable!] (restricted)
S. Erbaş & Chera Sayers, 2001. "Can a Shorter Workweek Induce Higher Employment? Mandatory Reductions in the Workweek and Employment Subsidies," International Tax and Public Finance, Springer, vol. 8(4), pages 485-509, August. [Downloadable!] (restricted)
Giacomo Corneo, 1995. "Distributional implications of a shorter working week: An unpleasant note," Journal of Economics, Springer, vol. 62(1), pages 25-31, February. [Downloadable!] (restricted)
Felix FitzRoy & Michael Funke & Michael A. Nolan, 2001. "Taxation, Unemployment and Working Time in Models of Economic Growth," Discussion Paper Series, Department of Economics 0112, Department of Economics, University of St. Andrews. [Downloadable!]
Regt,E,de, 1999. "Wage Bargaining, Working Time and Unemployment," Research Memoranda 006, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]

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