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Employment effects of work sharing: an econometric analysis for West Germany

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  • Steiner, Viktor
  • Peters, Ralf-Henning

Abstract

In this paper we estimate the employment effects of a reduction in weekly normal hours in West German manufacturing on the basis of an econometric models using industry panel data. We distinguish between unskilled, skilled and high-skilled workers and show that labor demand elasticities with respect to real wages differ significantly between these three skill groups. Given wages, the direct employment effect of a reduction in weekly normal hours is negligible for all three groups. However, taking the adjustment of wages into account, which compensates workers to some extent for lost income due to the reduction of working hours, the net employment effect becomes negative on average. Due to their relatively large wage elasticity, this negative effect is particularly strong for the unskilled. ?Work sharing? by means of general hours-reductions can thus not be considered an adequate policy to reduce unemployment.

Suggested Citation

  • Steiner, Viktor & Peters, Ralf-Henning, 2000. "Employment effects of work sharing: an econometric analysis for West Germany," ZEW Discussion Papers 00-20, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5305
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    References listed on IDEAS

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    1. Jennifer Hunt, 1999. "Has Work-Sharing Worked in Germany?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 117-148.
    2. 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.
    3. Kapteyn, Arie & Kalwij, Adriaan & Zaidi, Asghar, 2004. "The myth of worksharing," Labour Economics, Elsevier, vol. 11(3), pages 293-313, June.
    4. Marimon, Ramon & Zilibotti, Fabrizio, 2000. "Employment and distributional effects of restricting working time," European Economic Review, Elsevier, vol. 44(7), pages 1291-1326, June.
    5. Koebel, Bertrand M. & Falk, Martin, 1999. "Curvature conditions and substitution pattern among capital, energy, materials and heterogeneous labour," ZEW Discussion Papers 99-06, ZEW - Leibniz Centre for European Economic Research.
    6. Calmfors, Lars & Hoel, Michael, 1988. " Work Sharing and Overtime," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 45-62.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Is work sharing an answer for high unemployment?
      by James Pethokoukis in AEIdeas on 2012-06-13 20:15:00

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    Cited by:

    1. Bartsch, Klaus, 2007. "Gesamtwirtschaftliche Wirkungen von Arbeitszeiterhöhungen ohne Lohnausgleich: Makroökonometrische Wirkungsanalysen für Deutschland im Kontext der aktuellen Arbeitszeitdebatte," Arbeitspapiere 100, Hans-Böckler-Stiftung, Düsseldorf.
    2. Koch, Susanne, 2001. "Arbeitszeit und Beschäftigung im gesamtwirtschaftlichen Zusammenhang : Arbeitszeitfragen und ihre Behandlung in ökonomischen Modellen: Literaturüberblick und Forschungsperspektiven (Working time and e," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 34(1), pages 28-44.
    3. Conrad, Klaus & Koschel, Henrike & Löschel, Andreas, 2005. "Not Employed 37 Hours or Employed 41? A CGE Analysis for Germany," ZEW Discussion Papers 05-42, ZEW - Leibniz Centre for European Economic Research.
    4. Sánchez, Rafael, 2013. "Do reductions of standard hours affect employment transitions?: Evidence from Chile," Labour Economics, Elsevier, vol. 20(C), pages 24-37.
    5. Thorsten Schank, 2006. "Have Employees In Germany Received Full Wage Compensation After A Cut In Standard Hours?," Manchester School, University of Manchester, vol. 74(3), pages 273-293, June.
    6. Koch, Susanne, 2001. "Arbeitszeit und Beschäftigung im gesamtwirtschaftlichen Zusammenhang : Arbeitszeitfragen und ihre Behandlung in ökonomischen Modellen: Literaturüberblick und Forschungsperspektiven (Working time and e," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 34(1), pages 28-44.
    7. Koch, Susanne, 2001. "Arbeitszeit und Beschäftigung im gesamtwirtschaftlichen Zusammenhang : Arbeitszeitfragen und ihre Behandlung in ökonomischen Modellen: Literaturüberblick und Forschungsperspektiven (Working time and e," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 34(1), pages 28-44.

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