Worker Productivity, Working Time Reduction, And The Short–Run And Long–Run Employment Effects
| Date | 01 September 2002 |
| Author | Juin–jen Chang,Chun–chieh Huang,Chung–cheng Lin,Ching–chong Lai |
| Published date | 01 September 2002 |
| DOI | http://doi.org/10.1111/1467-9485.00236 |
WORKER PRODUCTIVITY, WORKING TIME
REDUCTION, AND THE SHORT-RUN AND
LONG-RUN EMPLOYMENT EFFECTS
Chun-chieh Huang,*Juin- jen Chang,** Ching-chong Lai ***
and Chung-cheng Lin****
ABSTRACT
This paper illustrates a shirking-type efficiency wage model to explain why shorter
working hours cause an ambiguous effect on employment as the empirical result.
We find that shorter working hours have an uncertain impact on the work effort,
and the relationship between work effort and shorter working time is a decisive
factor in the employment effect of working time reduction. Moreover, it is also
found that, given the zero profit constraint, the long-run employment effect of
reducing working hours will intensify the short-run employment effect.
II
NTRODUCTION
The question about whether shorter working hours may increase employment is
a serious policy issue and has been hotly debated among collective bargainers
since the seventies. Advocators recommend publicly that a reduction in standard
working hours will provide benefits to the unemployed through the provision of
new jobs, improving the workers’ quality of life. Opponents argue that shorter
working hours may increase labour costs and consequently cut back firms’
demand for labour. Although the debate still continues, considerable progress
has been made toward achieving the goal of shorter working hours in many
industrial countries.
Many economists in academic circles have devoted much effort to analyzing
potential ‘work-sharing’ of a reduction in working hours, but in general the
results they yield are inconclusive or even quite negative. For instance, Hart
(1987, pp. 93 –97) illustrates that, in a cost minimization model with endogenous
overtime, a decrease in standard working hours causes the worker’s marginal
cost to rise relative to that of overtime hours. Therefore, shorter working hours
will induce the firm to substitute more overtime hours per worker for fewer
workers. In a labour turnover model of efficiency wages, Hoel and Vale (1986)
Scottish Journal of Political Economy,Vol.49,No.4,September2002
#Scottish Economic Society 2002,Publ ishedby Blackwell Publishers Ltd, 108 Cowley Road, Oxford OX4 1JF, UK and
350 Main Street, Malden, MA 02148, USA
357
*National Cheng Chi University, Taiwan
**Academia Sinica and Fu-Jen Catholic University, Taiwan
***Academia Sinica and National Taiwan University, Taiwan
****Academia Sinica, Taiwan
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