Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71281
Authors: 
Osuna, Victoria
Year of Publication: 
2013
Series/Report no.: 
Economics Discussion Papers 2013-27
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.
Subjects: 
workweek
wages
employment
productivity
JEL: 
E24
E60
J21
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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