The effects of working time reductions on wages, actual hours and equilibrium unemployment

Oskar Skans

No 2001:8, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: This paper extends a general equilibrium model of unemployment and working hours and evaluates the model on a 5 percent working time reduction for shift workers in Sweden. Panel data from firms' payroll records are used to examine the relationship between standard hours, actual hours and hourly wages. The main results are: i) Actual hours only decreased by 40 percent of the reduction in standard hours. ii) Hourly wages for shift workers rose relative to wages for daytime workers. iii) The wage increase was more pronounced for workers who received a larger reduction of actual hours. The conclusion is that working time reductions that allow for discretion on lower levels of bargaining do not necessarily reduce actual hours. Furthermore, working time reductions may result in an increase in wage pressure, causing unemployment to rise.

Keywords: Work sharing; working hours; unemployment; wage pressure (search for similar items in EconPapers)
JEL-codes: E24 J22 J23 J51 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2001-07-12
New Economics Papers: this item is included in nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Labour Economics, 2004, pages 647-665.

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