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How Working Time Reduction Affects Employment and Earnings

Pedro Raposo () and Jan van Ours ()

No 2008-81, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: December 1, 1996 Portugal introduced a new law on working hours which gradually reduced the standard workweek from 44 hours to 40 hours. We study how this mandatory working hours reduction affected employment and earnings of workers involved. We find for workers who were affected by the new law that working hours decreased, while hourly wages increased, keeping monthly earnings approximately constant. We also find that the working hours reduction did not lead to an increased job loss of workers directly affected. Finally, we find that workers who themselves were not directly affected were influenced by the working hours reduction indirectly. If they worked in a firm with many workers working more than 40 hours before the change in law was introduced.

Keywords: Workweek reduction; policy reform; employment dynamics; earnings (search for similar items in EconPapers)
JEL-codes: J22 J31 J63 J81 (search for similar items in EconPapers)
Date: 2008
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