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The effect of lower hours of work on wages and employment

By G. Houpis


This paper examines the likely effects of a reduction in hours of work employment and wages. We firstly assume that the wage is fixed and present evidence on the direct employment effect of a fall in hours of work. We then analyze the indirect effect on employment from a change in the hourly wage when this is determined endogenously. Our results suggest that reductions in hours of work are not likely to lead to an increase in the hourly wage and will therefore reduce unemployment by sharing any given volume of work among more people. These findings are robust to a number of alternative assumptions about wage and hours determination

Topics: HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 1993
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Provided by: LSE Research Online
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