Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 135: Working Time, Employment, and Work Sharing: Evidence from Sweden

Tor Jacobson () and Henry Ohlsson ()
Additional contact information
Tor Jacobson: Department of Economic Statistics, Postal: Stockholm School of Economics, Box 6501, 113 83 Stockholm, Sweden
Henry Ohlsson: Department of Economics, Postal: Uppsala University, Box 513, S-751 20 Uppsala, Sweden

Abstract: We study three necessary conditions for work sharing to increase employment. First, there must exist a negative long-run relation between working time and employment. Second, hours per worker must be exogenous with respect to wages and employment. Third, policy makers must be able to influence actual hours per worker. We formulate a theoretical model for employment, hours peer worker, production, and real wages. A VAR system with cointegrating constraints is estimated by maximum likelihood using Swedish private sector data 1970-1- 1990:4 We find (I) no long-run relation between hours per worker and employment, (II) that hours per worker are endogenous with respect to the estimation of long-run parameters, and (III) that legislated working time and hours per worker are related to each other in the long run.

Keywords: Work sharing; maximum likelihood cointegration; employment; hours per worker; real wages

JEL-codes: E24; J22; J23

21 pages, November 1996

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