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Working time reduction and employment in a finite world

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  • Jean‐François Fagnart
  • Marc Germain
  • Bruno Van der Linden

Abstract

We study the consequences of a working time reduction (WTR) in a growth model with efficiency wages and an essential natural resource (natural capital), and in which technical progress cannot reduce the resource content of final production to zero. We show that if natural capital is scarce enough, a WTR increases the long‐term levels of the hourly wage and employment. A numerical analysis of the transitory impacts of a WTR confirms that when natural capital is scarcer, a WTR increases employment more and the hourly wage less, with a less negative initial impact on output.

Suggested Citation

  • Jean‐François Fagnart & Marc Germain & Bruno Van der Linden, 2023. "Working time reduction and employment in a finite world," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 170-207, January.
    • Handle: RePEc:bla:scandj:v:125:y:2023:i:1:p:170-207
    DOI: 10.1111/sjoe.12513
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    More about this item

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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