Did work-sharing work in France? Evidence from a structural cointegrated VAR model

Published in the "European Journal of Political Economy", vol 24, no 2, pp. 478-490.

Keywords: worksharing, structural vector error correction model, employment

Download: Almost final version (August 2007), but still as eye-opening (or mind-boggling?) as the first one; this is a follow-up paper on Logeay&Schreiber (2005, "Testing the effectiveness...").

Abstract: Abstract French employment increased significantly after a labor-market reform in 2000. This paper analyzes whether that development was driven by worksharing (the mandated reduction of the workweek length) as claimed by the government. We use a structural VAR model in error correction form (SVECM) to assess the impact of shocks to the workweek length. It turns out that downward workweek shocks actually had adverse employment effects. We conclude that other reform components were responsible for the employment success in France, namely reduced non-wage labor costs and possibly higher firm-level flexibility of temporarily adjusting the workweek.

(Latest update: October 2017)