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Work sharing, employment and wages

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  • Calmfors, Lars

Abstract

The paper analyzes the effects of a reduction in working time on wages and employment with a monopoly union. In general it is not clear in which directions these variables move, but if employment and working time are perfect substitutes, the effects are related to how working time has been determined initially: the wage increases if initial working time is smaller than or equal to the trade union optimum, whereas the result is unclear when it is larger. In this case it is never optimal for a trade union to reduce both the wage and working time in response to a recessionary supply shock. The analysis may help to explain varying attitudes towards work sharing in different countries.

Suggested Citation

  • Calmfors, Lars, 1985. "Work sharing, employment and wages," European Economic Review, Elsevier, vol. 27(3), pages 293-309.
  • Handle: RePEc:eee:eecrev:v:27:y:1985:i:3:p:293-309
    DOI: 10.1016/S0014-2921(85)80017-9
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    References listed on IDEAS

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    1. Ehrenberg, Ronald G., 1971. "Heterogeneous labor, the internal labor market, and the dynamics of the employment-hours decision," Journal of Economic Theory, Elsevier, vol. 3(1), pages 85-104, March.
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