Working Paper: NBER ID: w5716
Authors: Jennifer Hunt
Abstract: 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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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reductions in standard hours (J22) | actual hours worked (J22) |
| reductions in standard hours (J22) | hourly straight-time wage (J33) |
| actual hours worked (J22) | wage compensation (J33) |
| reductions in standard hours (J22) | wage compensation (J33) |
| union negotiations (J50) | wage compensation (J33) |