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Has Work-Sharing Worked in Germany?

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  • Jennifer Hunt

Abstract

Starting in 1985, (West) German unions began to reduce standard hours on an industry by industry basis, in an attempt to lower unemployment. Whether work-sharing works - whether employment rises when hours per worker are reduced - is theoretically ambiguous. I test this using both individual data from the German Socio-Economic Panel and industry data to exploit the cross-section and time-series hours variation. For the 1984-1989 period I find that, in response to a one hour fall in standard hours, employment rose by 0.3-0.7%, but that total hours worked fell 2-3%, implying possible output losses. As a group workers were better off, however, as the wage bill rose. The employment growth implied by the mean standard hours decline, at most 1.1%, was not enough to bring German employment growth close to the U.S. rate. Results for the 1990-94 period were more pessimistic.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5724.

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Date of creation: Aug 1996
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Publication status: published as Quarterly Journal of Economics, Vol. 114, no. 1 (February 1999): 117-148.
Handle: RePEc:nbr:nberwo:5724

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  1. Brunello, Giorgio, 1989. "The Employment Effects of Shorter Working Hours: An Application to Japanese Data," Economica, London School of Economics and Political Science, vol. 56(224), pages 473-86, November.
  2. G Houpis, 1993. "The Effect of Lower Hours of Work on Wages and Employment," CEP Discussion Papers dp0131, Centre for Economic Performance, LSE.
  3. Hart, R A & Sharot, T, 1978. "The Short-run Demand for Workers and Hours: A Recursive Model," Review of Economic Studies, Wiley Blackwell, vol. 45(2), pages 299-309, June.
  4. Booth, Alison & Schiantarelli, Fabio, 1987. "The Employment Effects of a Shorter Working Week," Economica, London School of Economics and Political Science, vol. 54(214), pages 237-48, May.
  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. 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.
  7. Jennifer Hunt, 1996. "The Response of Wages and Actual Hours Worked to the Reduction of Standard Hours in Germany," Discussion Papers of DIW Berlin 138, DIW Berlin, German Institute for Economic Research.
  8. Calmfors, Lars, 1985. "Work sharing, employment and wages," European Economic Review, Elsevier, vol. 27(3), pages 293-309.
  9. Linda Bell & Richard Freeman, 1994. "Why Do Americans and Germans Work Different Hours?," NBER Working Papers 4808, National Bureau of Economic Research, Inc.
  10. Wadhwani, Sushil B, 1987. "The Effects of Inflation and Real Wages on Employment," Economica, London School of Economics and Political Science, vol. 54(213), pages 21-40, February.
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  1. Is work sharing an answer for high unemployment?
    by James Pethokoukis in AEIdeas on 2012-06-13 15:15:00
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