Examination of the Correlation between Working Time Reduction and Employment

TL;DR

This paper investigates whether reducing working hours can counteract unemployment caused by technological change, concluding that it does not effectively increase employment based on empirical evidence.

Contribution

It provides a comprehensive statistical analysis of existing studies, clarifying that working time reduction is not a viable solution to long-term unemployment.

Findings

Working time reduction does not increase employment

Reducing working hours is ineffective against technological unemployment

Empirical studies show no positive employment effect from shorter working hours

Abstract

In recent years, it has been debated whether a reduction in working hours would be a viable solution to tackle the unemployment caused by technological change. The improvement of existing production technology is gradually being seen to reduce labor demand. Although this debate has been at the forefront for many decades, the high and persistent unemployment encountered in the European Union has renewed interest in implementing this policy in order to increase employment. According to advocates of reducing working hours, this policy will increase the number of workers needed during the production process, increasing employment. However, the contradiction expressed by advocates of working time reduction is that the increase in labor costs will lead to a reduction in business activity and ultimately to a reduction in demand for human resources. In this article, we will attempt to answer the question of whether reducing working hours is a way of countering the potential decline in employment due to technological change. In order to answer this question, the aforementioned conflicting views will be examined. As we will see during our statistical examination of the existing empirical studies, the reduction of working time does not lead to increased employment and cannot be seen as a solution to the long-lasting unemployment.