Has Work Sharing Worked in Germany?
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 1984–9 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 by 2–3%, implying possible output losses. As a group, however, workers were better off 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 US rate. Results for the 1990–94 period were more pessimistic.
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References listed on IDEAS
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- 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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- repec:oup:restud:v:45:y:1978:i:2:p:299-309 is not listed on IDEAS
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- 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.
- 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.
- Hunt, Jennifer, 1996. "The Response of Wages and Actual Hours Worked to the Reduction of Standard Hours in Germany," CEPR Discussion Papers 1526, C.E.P.R. Discussion Papers.
- G Houpis, 1993. "The Effect of Lower Hours of Work on Wages and Employment," CEP Discussion Papers dp0131, Centre for Economic Performance, LSE.
- R. A. Hart & T. Sharot, 1978. "The Short-run Demand for Workers and Hours: A Recursive Model," Review of Economic Studies, Oxford University Press, vol. 45(2), pages 299-309.
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