NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Response of Wages and Actual Hours Worked to the Reductions of Standard Hours

Jennifer Hunt

NBER Working Paper No. 5716
Issued in August 1996
NBER Program(s):   LS

A transformation of what had become a universal 40 hour standard work week in Germany began in 1985 with reductions negotiated in the metal-working and printing sectors. These reductions have continued through 1995, and were followed by reductions in other sectors. The union campaign aimed to increase employment through work-sharing, and is being emulated in the United States with the launch of a reduced hours campaign by the AFL-CIO. Using data from the German Socio-Economic Panel, I find that increased overtime or reduced short time was little used to offset the reduction in standard hours: a one hour reduction in standard hours appears to have translated into a reduction in actual hours worked of between 0.85 and 1 hour for workers in manufacturing. One might expect this to have resulted in a loss of earnings for workers in affected industries. However, I substantiate the union claim of full wage compensation : reductions in standard hours were accompanied by a relative rise in the hourly straight-time wage of 2-3% for each hour fall in standard hours, enough to keep monthly earnings the same as in unaffected industries.

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Document Object Identifier (DOI): 10.3386/w5716

Published: Quarterly Journal of Economics, Vol.CXIV, Issue 1 (February 1999),pp. 117-148. "Has Work-sharing Worked in Germany?"

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