Working hours flexibility and employment

Working hours flexibility and employment


Fritz Thyssen Stiftung

Period: 01.10.1998 – 01.04.2001

Working hours flexibility is considered by many as a promising public policy to reduce unemployment. However, there is almost no empirical evidence for the potential employment effects of increasing flexibility of working hours. The flexibility of working hours has two different dimensions, that is, the amount of working hours and the timing of paid work. In this project, we will confine ourselves to the flexibility concerning the number of working hours, including marginal jobs, part-time jobs and overtime hours. An important determinant for demand and supply of part-time jobs is the hourly wage rate. In the literature, there exist several approaches to explain negative wage differentials for part-time jobs. However, a comprehensive study on wage differentials, taking into account the endogeneity of the labour supply decision is lacking for Germany. Therefore we estimate a simultaneous wage-hours model for West German women. The share of part-time work depends upon the unions’ attitude, the economic structure and labour demand, the preferences of the employees and the social norms. Therefore, we analyse the distribution of working hours in international perspectives. We will concentrate on a comparison between Germany, the Netherlands and Great Britain, because they represent different types of welfare regimes, which we expect to cause differences in preferences, unions’ attitude and economic incentives with respect to the labour supply decision. The international comparison is supposed to shed more light on the modest part-time boom in Germany in contrast to the Netherlands and the United Kingdom which are often described as perfect examples concerning the setting-up of a “part-time society”. Additionally, we analyse the main determinants of labour supply decisions of men and women and investigate to which extent employees are restricted due to regulations concerning working hours. Based on these results, we can derive conclusions about the driving factors causing international differences in the distribution of working hours. Another main point of the research project is to estimate the potential welfare and employment effects due to increasing working hours flexibility. Surveys show that employees often work more hours than they actually would like. Thus, total employment is supposed to increase if people could realize their desired working hours. However, this off-hand calculation overestimates the effect of loosening hours constraints, because even in a very flexible labour market there will exist hours restrictions for certain occupations. Therefore, we will simulate Germans’ working hours in a more flexible world, namely the Dutch labour market. Based on these results, we can address the question whether Germans would be better off under the Dutch system and whether an increasing working hours flexibility can contribute to solving the unemployment problem in Germany.

Project members

Cooperation partner
Institute for Employment Research (IAB), Nürnberg, DE // Tilburg University, Tilburg, NL // Université Louis Pasteur, Straßbourg, FR // Institute for the Study of Labor, Bonn, DE

Selected Publications