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Employed 40 Hours or Not Employed 39: Lessons from the 1982 Mandatory Reduction of the Workweek

  • Crépon, Bruno
  • Kramarz, Francis

We use longitudinal individual wage, hours, and employment data to investigate the effect of the February 1, 1982 mandatory reduction of weekly working hours in France. Just after François Mitterrand's election in May 1981, the government decided to increase the minimum wage by 5%. Then, as promised in its electoral program, the socialist government reduced the workweek from 40 to 39 hours. At the same time, it mandated stable monthly earnings for minimum wage workers and recommended the stabilization of monthly earnings for other workers (recommendations followed by 90% of the firms). We show that workers directly affected by these changes - those working 40 hours in March 1981 - were more likely to lose their jobs between 1981 and 1982 than workers not affected by the changes - those working 36 to 39 hours in March 1981. Moreover, because the decree enforcing the new standard was issued faster than earlier promises, some firms had no time to complete negotiations and their workers were still working 40 hours after February 1, 1982. We show that these workers have also been strongly affected by the reduction in standard hours. Our estimates of the impact of this one-hour reduction of the workweek on employment losses vary between 2% and 4%, depending on the methodology or the data used. Furthermore, we show that minimum wage workers have been most affected by the changes. This result, consistent with our model, is due to the impossibility of adjusting their monthly wage which results in excess job destruction and creation. These results should help us understand the possible effects of the upcoming mandatory reduction of hours in France, where the maximum weekly working hours will gradually decline from 39 to 35 hours beginning in the year 2000. Similar projects are envisaged in other European countries, which hope that reductions in hours will be an efficient policy for reducing unemployment.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2358.

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Date of creation: Jan 2000
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Handle: RePEc:cpr:ceprdp:2358
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  1. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  2. 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).
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  8. Hunt, Jennifer, 1997. "Has Work Sharing Worked in Germany?," CEPR Discussion Papers 1553, C.E.P.R. Discussion Papers.
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  11. John M. Abowd & Francis Kramarz & Thomas Lemieux & David Margolis, 2000. "Minimum Wages and Youth Employment in France and the United States," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00354400, HAL.
  12. Abowd, John M. & Kramarz, Francis & Margolis, David N. & Philippon, Thomas, 2000. "The Tail of Two Countries: Minimum Wages and Employment in France and the United States," IZA Discussion Papers 203, Institute for the Study of Labor (IZA).
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  17. Trejo, Stephen J, 1991. "The Effects of Overtime Pay Regulation on Worker Compensation," American Economic Review, American Economic Association, vol. 81(4), pages 719-40, September.
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