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Working-Time Regulation, Firm Heterogeneity, and Efficiency

Author

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  • Ortega, Javier

Abstract

A labour-matching economy with ex post heterogeneous firms is presented. When bargaining over the wage, firms and workers do not know the level of product demand. Once demand is realized, hours of work are chosen. We show that the existence of a legal workweek may enhance efficiency with respect to laissez-faire: while laissez-faire is good at allocating hours across firms, regulation may be better at reproducing optimal hours. Shortening the legal workweek raises employment and is Pareto-improving if and only if the demand faced by low-demand firms and/or the overtime premium are small enough.

Suggested Citation

  • Ortega, Javier, 2003. "Working-Time Regulation, Firm Heterogeneity, and Efficiency," CEPR Discussion Papers 3736, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3736
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    Citations

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    Cited by:

    1. Camille Logeay & Sven Schreiber, 2006. "Testing the effectiveness of the French work-sharing reform: a forecasting approach," Applied Economics, Taylor & Francis Journals, vol. 38(17), pages 2053-2068.
    2. Fang, Tony & Lin, Carl & Tang, Xueli, 2018. "How Has the Two-Day Weekend Policy Affected Labour Supply and Household Work in China?," IZA Discussion Papers 11698, Institute of Labor Economics (IZA).
    3. Auray, Stéphane & Danthine, Samuel, 2010. "Bargaining frictions, labor income taxation, and economic performance," European Economic Review, Elsevier, vol. 54(6), pages 778-802, August.
    4. Fabrice Gilles, 2015. "Evaluating the Impact of a Working Time Regulation on Capital Operating Time: The French 35-hour Work Week Experience," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(2), pages 117-148, May.
    5. Díaz, Antonia & Echevarria, Cristina, 2009. "Why a fixed workweek?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 790-798, October.
    6. van Kranenburg, H.L., 2005. "Relevant market and pricing behavior of regional newspapers in the Netherlands," Research Memorandum 026, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    7. Schreiber, Sven, 2008. "Did work-sharing work in France? Evidence from a structural co-integrated VAR model," European Journal of Political Economy, Elsevier, vol. 24(2), pages 478-490, June.

    More about this item

    Keywords

    Efficiency; Unemployment; Working-time; Work-sharing;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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