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The effects of working time reductions on wages, actual hours and equilibrium unemployment

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Author Info
Nordström Skans, Oskar () (IFAU - Office of Labour Market Policy Evaluation)

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Abstract

This paper extends a general equilibrium model of unemployment and working hours and evaluates the model on a 5 percent working time reduction for shift workers in Sweden. Panel data from firms' payroll records are used to examine the relationship between standard hours, actual hours and hourly wages. The main results are: i) Actual hours only decreased by 40 percent of the reduction in standard hours. ii) Hourly wages for shift workers rose relative to wages for daytime workers. iii) The wage increase was more pronounced for workers who received a larger reduction of actual hours. The conclusion is that working time reductions that allow for discretion on lower levels of bargaining do not necessarily reduce actual hours. Furthermore, working time reductions may result in an increase in wage pressure, causing unemployment to rise.

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Publisher Info
Paper provided by IFAU - Institute for Labour Market Policy Evaluation in its series Working Paper Series with number 2001:8.

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Length: 42 pages
Date of creation: 12 Jul 2001
Date of revision:
Publication status: Published in Labour Economics, 2004, pages 647-665.
Handle: RePEc:hhs:ifauwp:2001_008

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Related research
Keywords: Work sharing; working hours; unemployment; wage pressure;

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Earle, John S & Pencavel, John, 1990. "Hours of Work and Trade Unionism," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S150-74, January. [Downloadable!] (restricted)
  2. Aigner, Dennis J., 1973. "Regression with a binary independent variable subject to errors of observation," Journal of Econometrics, Elsevier, vol. 1(1), pages 49-59, March. [Downloadable!] (restricted)
  3. Kapteyn, A. & Kalwij, A. & Zaidi, A., 2000. "The myth of worksharing," Discussion Paper 23, Tilburg University, Center for Economic Research. [Downloadable!]
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  4. Bertil Holmlund, . "Labor Taxation in Search Equilibrium with Home Production," EPRU Working Paper Series 00-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
    Other versions:
  5. Booth, Alison & Ravallion, Martin, 1993. "Employment and Length of the Working Week in a Unionized Economy in which Hours of Work Influence Productivity," The Economic Record, The Economic Society of Australia, vol. 69(207), pages 428-36, December.
  6. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-75, March. [Downloadable!] (restricted)
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  7. 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)
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  8. Calmfors, Lars & Hoel, Michael, 1988. " Work Sharing and Overtime," Scandinavian Journal of Economics, Blackwell Publishing, vol. 90(1), pages 45-62.
  9. Tor Jacobson & Henry Ohlsson, 2000. "Working time, employment, and work sharing: Evidence from Sweden," Empirical Economics, Springer, vol. 25(1), pages 169-187. [Downloadable!] (restricted)
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  10. Jennifer Hunt, 1998. "Hours Reductions as Work-Sharing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1998-1), pages 339-381. [Downloadable!]
  11. Marimon, Ramon & Zilibotti, Fabrizio, 2000. "Employment and distributional effects of restricting working time," European Economic Review, Elsevier, vol. 44(7), pages 1291-1326, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alexius, Annika & Carlsson, Mikael, 2001. "Measures of Technology and the Business Cycle: Evidence from Sweden and the U.S," Working Paper Series 174, Trade Union Institute for Economic Research. [Downloadable!]
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