Working Paper Series
IFAU - Institute for Evaluation of Labour Market and Education Policy
Oskar Nordström Skans
The effects of working time reductions on wages, actual hours and equilibrium unemployment
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; (follow links to similar papers)
JEL-Codes: E24; J22; J23; J51; (follow links to similar papers)
42 pages, July 12, 2001
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- This paper is published as:
Nordström Skans, Oskar, (2004), 'The impact of working-time reductions on actual hours and wages -Evidence from Swedish register-data', Labour Economics, Vol. 11, October, No. 5, pages 647-665
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