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

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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.

Bibliographical metadata

Original languageEnglish
JournalOxford Economic Papers
Publication statusPublished - 2014

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