Testing the effectiveness of the French work-sharing reform: a forecasting approach (with Camille Logeay)

Published in "Applied Economics", 2006, vol. 38, no. 17 (September), pp. 2053-2068.

Keywords: unemployment, work-sharing, France, VECM, forecasting

Download: More or less the version that was presented at EEA 2004: Final version . Es gibt auch eine deutsche Version des Papiers (Juni 2005). Earlier version presented at the European Association of Labour Economists (EALE) 2003 meeting, and an even earlier version in German appeared as DIW Berlin discussion paper no. 362.

Abstract: We analyze the macroeconomic impact of the French work-sharing reform of 2000 (a reduction of standard working hours in combination with wage subsidies). Using a vector error correction model (VECM) for several labor market variables as well as inflation and output we produce out-of-sample forecasts for 2000/2001. A comparison of these forecasts -which serve as a benchmark simulation without structural shifts- to the realized values (with shifts) suggests significant beneficial employment effects of the policy mix. Other shifts were absent and thus cannot explain the outcome. Output, productivity, hourly labor costs, and inflation are only transitorily affected or not at all.

(Latest update: October 2017)