Does Work Sharing Work? A Two-Step Analysis on the French Work Time Reduction Experience Using Macro and Micro Data

Abstract: Hours per worker have steadily declined since the Industrial Revolution, which can partly be attributed to work time reduction policies. In recent years the debate and proposals of such policies have become increasingly popular. The purpose of this master's thesis is to give empirical evidence on the employment effects of one such policy, namely the French work time reduction that took place between 1998 and 2002. With the aim of reducing unemployment through work sharing, the policy lowered the standard work week from 39 to 35 hours. This thesis contributes to the literature evaluating work time reductions by studying effects on the extensive margin for workers across skill levels, economic sectors, age and type of contract. The analysis is conducted in two steps. Firstly, a synthetic control method using variation across countries is used to study aggregate employment effects for low-skilled industry and service workers, young and senior workers, as well as the prevalence of temporary contracts. Secondly, this is supplemented with an event study that uses variation within France from the French Labor Force survey to investigate potential heterogeneity in effects for workers with different skill levels. Results show that the policy had limited effects on employment for the studied groups, and that effects on workers' employment probabilities across skill levels were not heterogeneous after the reform. Reducing the standard work week may bring several benefits, but the results from this thesis indicate that such policies have limited effects on employment.