Can a Shorter Workweek Induce Higher Employment? Mandatory Reductions in the Workweek and Employment Subsidies
IMF Working Papers, October 1, 1999
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- Can a Shorter Workweek Induce Higher Employment? Mandatory Reductions in the Workweek and Employment Subsidies
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Bibliographic details
- Authors: S. Nuri Erbas, Chera L. Sayers
- Published: October 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451856422.001
Summary findings
- A reduction in the legal workweek may induce a degree of downward wage flexibility.
- An employment subsidy to firms accommodates downward wage rigidity.
- A policy that combines a reduction in the workweek with an employment subsidy may be able to increase employment.
- In general, the long-run employment outcome is ambiguous.
- A decline in output cannot be ruled out.
Policy implications and recommendations
- Combining workweek reductions with employment subsidies can, under some conditions, increase employment.
- More direct policy measures whose impact can be assessed with greater certainty should be given priority to decrease long term unemployment.
- In particular, removing structural rigidities in the labor market is highlighted as a priority.
Analytical focus and themes
- Employment, Employment subsidies, Income, Labor, National accounts, Wages
- Key analytical topics: equilibrium wage, income level, job creation, labor demand, labor supply, market wage, minimum wage, overtime work, responses to a cut, structural unemployment, take-home pay, wage determination, wage response, worker income, worker utility, workweek