More hours, more jobs? The employment effects of longer working hours

Article, Research, Preprint English OPEN
Andrews, Martyn ; Gerner, Hans-Dieter ; Schank, Thorsten ; Upward, Richard (2014)
  • Publisher: Oxford University Press
  • Journal: volume 67, issue 2, pages 245-268
  • Related identifiers: doi: 10.1093/oep/gpu026
  • Subject: difference-in-differences | J81 | Deutschland | C23 | Überstunden | J23 | employment | plant-level data | plant-level data, employment, working time, difference-in-differences | working time | Arbeitszeitgestaltung | Beschäftigungseffekt
    • jel: jel:C23 | jel:J81 | jel:J23
      ddc: ddc:330
    mesheuropmc: food and beverages

Increases in standard hours of work have been a contentious policy issue in Germany. Whilst this might directly lead to a substitution of workers by hours, there may also be a positive employment effect due to reduced costs. Moreover, the response of firms may differ between firms that offer overtime and those that do not. For a panel of German plants (2001–2006) drawn from the IAB Establishment Panel, we are the first to analyse the effect of increased standard hours on employment. Using difference-in-difference methods we find that, consistent with theory, overtime plants showed a significant positive employment response, whilst for standard-time plants there is no difference between plants that increased standard hours and those that did not. There is clear evidence of wage concession in all treated plants.
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