IMF Survey: France's 35-Hour Week: Benefit or Straitjacket?
IMF News, January 29, 2007
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Bibliographic details
- Authors: Marcello Estevão, Filipa Sá IMF Western Hemisphere Department, MIT January
- Published: January 29, 2007
Overview
- Policy: Law enacted in 1998 that forced companies with more than 20 employees to institute a 35-hour workweek by 2000; smaller companies with fewer than 20 employees were given until 2002 to implement the measure.
- Objective: The intention was to create more jobs at a time of high unemployment.
- Context: Since the 1950s, the number of hours worked has been declining in Europe compared with the United States and Japan; today, the average American works about 400 hours more a year than the average European.
Methodology
- Comparative design: The working paper evaluated the law's effects by comparing workers in large firms (treatment group) and small firms (control group) before and after the law went into effect.
- Analogy: The approach is described as similar to medical experiments—administering a treatment to one group and not to another—to isolate the law's impact from other political, economic, and social changes.
Key empirical findings
- Employment effects:
- The 35-hour workweek reduced rather than increased overall employment for workers directly affected by the law.
- Employment growth in large and small firms in 2000 was running at a similar pace, which suggests that the law did not raise overall employment.
- There was an increase in the hiring of unemployed workers in large firms when compared with small firms after the law was enacted; this increased job turnover could reflect large companies trying to keep their labor costs down.
- Labor mobility and second jobs:
- The law encouraged workers in large firms to look for second jobs and move to small firms, where the law was implemented later.
- Wages:
- Hourly wages increased in large firms compared with small firms. This increase may reflect large firms' need to compensate their employees for working fewer hours.
- Worker satisfaction:
- French workers did not become happier after their workweek was reduced. Surveys measuring satisfaction and quality of life do not suggest French workers became more satisfied than their counterparts elsewhere in Europe after the enactment of the law.
- Overall assessment:
- The 35-hour workweek appears to have had a mainly negative impact. It failed to create more jobs and generated a significant—and mostly negative—reaction from both companies and workers as they tried to neutralize the law's effect on hours of work and monthly wages.
- While it cannot be ruled out that individuals who did not change their behavior because of the law became more satisfied with their work hours, simple survey measures do not show increased satisfaction.
Conclusions and implications
- The law did not achieve its primary objective of raising overall employment among affected workers.
- Unintended adjustments by firms and workers (increased hourly wages, job turnover, search for second jobs, moves to smaller firms) indicate behavioral responses that offset the policy’s intended effects.
- Comparative, before-and-after analysis across firm size is essential to isolate the direct effects of labor-time regulation from broader labor-market dynamics.
IMF Survey: France's 35-Hour Week: Benefit or Straitjacket? By Marcello Estevão and Filipa Sá, January 29, 2007.