Discussion Paper

No. 2013-27 | April 10, 2013
Working-Week Flexibility: Implications for Employment and Productivity

Abstract

This paper evaluates the implications for employment, productivity and wages of allowing for more flexibility in weekly hours worked introduced in the recent Spanish labour market reform (“the 2012 reform"). A crucial aspect of the model will be the extent to which firms will be able to choose the workweek when subject to demand shocks. The model is calibrated so that it reproduces the cross-sectional distribution of workweeks across plants and households and some features of the Spanish economy. The author compares the status quo steady-state, where a 40 hour workweek is imposed and no flexibility is allowed, with the steady state of economies with a higher degree of flexibility in weekly hours: the 2012 Reform, the Work sharing and the Full flexibility scenarios. She finds that the 2012 reform preserves employment and generates a 1.72% increase in productivity. In the work sharing scenario, the increase in employment (1.86%) comes at the expense of a lower productivity increase (1.31%) and a decrease in weekly hours worked (4%). Finally, the full flexibility scenario preserves employment and generates a substantial increase in productivity (2.6%) by allowing firms to completely adapt to changing economic conditions, by expanding or contracting the working week.

JEL Classification

E24 E60 J21

Cite As

Victoria Osuna (2013). Working-Week Flexibility: Implications for Employment and Productivity. Economics Discussion Papers, No 2013-27, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2013-27

Assessment



Comments and Questions


Anonymous - referee report 1
May 21, 2013 - 12:39

see attached file


Victoria Osuna - Anwer to referee report 1 dp 2013-27
May 24, 2013 - 13:20

First, let's start by thanking the referee for the comments. I think that the paper will benefit from addressing these comments and I hope to have the opportunity to submit a revision of the paper that takes into account the points made by the referee. I have uploaded a .pdf ...[more]

... where I rewrite what I interpret as the main referee's comments and try to provide a brief answer to them and to explain how a new version of the paper could deal with them.


Anonymous - Referee Report 2
July 29, 2013 - 08:48

see attached file


Victoria Osuna - Answer to Referee Report 2 dp 2013-27
July 30, 2013 - 12:53

Answer to Referee Report 2 dp 2013-27