Overtime Work, Lack of Labour, and Structural Mismatch: Some Extensions of the “European Unemployment Programme” Framework

Horst Entorf

No 1992041, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: The paper extends the framework of the EUP to cover the effects of changes in the number of working hours. Beside this, a measure for the structural imbalances not only for the labour market (structural unemployment rate at equilibrium) but also for the goods market are presented. The empirical implementation introduces the concept of feasible working hours, which account for the maximal amount of overtime hours in the labour constraint. Simulation studies analyse the consequences of the present policy of German trade unions which bargain for a reduction of standard working hours. The main conclusions are: (i) The increasing mismatch on the goods market that is reported, basically results from an increasing mismatch on the labour market; (ii) reducing standard working hours might be a short-sighted policy; it may increase unemployment due to some induced substitution of workers by overtime work, and, moreover, due to the induced reduction of feasible working hours.

Pages: 26
Date: 1992-09-01
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