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Working 40 Hours or Not Working 39: Lessons from the 1981 Mandatory Reduction of Weekly Working Hours

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  • Crépon, Bruno
  • Kramarz, Francis

Abstract

We use longitudinal individual wage, hours, and employment data to investigate the effect of the 1981 mandatory reduction of weekly working hours in France. A few months after François Mitterrand's election of May 1981, the government, applying its programme decided first to increase the minimum wage by 5% and, second, to reduce weekly working hours - from 40 to 39 - together with mandatory stability of monthly earnings of minimum wage workers and strong recommendation for stability of monthly earnings for other workers (indeed followed by 90% of the firms). We show that workers directly affected by these changes, those working 40 hours in March 1981, lost their jobs between 1981 and 1983 more often than workers not affected by the changes, those working 39 hours in March 1981 ; their year-to-year job loss probability increased from roughly 10% to 12.5%. Moreover, workers affected by both minimum wage changes and hours reduction were even more strongly hit ; their year-to-year job loss probability increased from roughly 10% to 26%. These results should help us understand the possible effects of the forthcoming mandatory reduction of hours in France, the weekly working hours going from 39 to 35 hours in year 2000. Similar projects are envisaged in other European countries hoping that hours reduction are an efficient way of tackling their unemployment problem.

Suggested Citation

  • Crépon, Bruno & Kramarz, Francis, 1999. "Working 40 Hours or Not Working 39: Lessons from the 1981 Mandatory Reduction of Weekly Working Hours," CEPR Discussion Papers 2158, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2158
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    References listed on IDEAS

    as
    1. John M. Abowd & Francis Kramarz & Thomas Lemieux & David N. Margolis, 2000. "Minimum Wages and Youth Employment in France and the United States," NBER Chapters,in: Youth Employment and Joblessness in Advanced Countries, pages 427-472 National Bureau of Economic Research, Inc.
    2. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    3. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1998. "Minimum Wages and Employment in France and the United States," Papiers du Laboratoire de Microéconomie Appliquée 1998-12, Université Panthéon-Sorbonne (Paris 1).
    4. Jennifer Hunt, 1998. "Hours Reductions as Work-Sharing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 339-381.
    5. Kramarz, Francis & Philippon, Thomas, 2001. "The impact of differential payroll tax subsidies on minimum wage employment," Journal of Public Economics, Elsevier, vol. 82(1), pages 115-146, October.
    6. Bell, David N.F. & Blanchflower, David G., 2011. "Youth Unemployment in Europe and the United States," IZA Discussion Papers 5673, Institute for the Study of Labor (IZA).
    7. Olivier Marchand & Daniel Rault & Etienne Turpin, 1983. "Des 40 heures aux 39 heures : processus et réactions des entreprises," Économie et Statistique, Programme National Persée, vol. 154(1), pages 3-15.
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    More about this item

    Keywords

    Hours Reduction; Minimum Wage; Unemployment;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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