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Reducing working hours: a general equilibrium analysis

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  • Terry J. Fitzgerald

Abstract

An examination of the effects of restricting the weekly hours of workers in a heterogeneous-agent, general-equilibrium framework. The main findings are that restricting weekly hours increases employment substantially, but may also lead to large declines in wages, productivity, output, and consumption, and can increase the wage disparity between skilled and unskilled workers.

Suggested Citation

  • Terry J. Fitzgerald, 1998. "Reducing working hours: a general equilibrium analysis," Working Papers (Old Series) 9801, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9801
    DOI: 10.26509/frbc-wp-199801
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    References listed on IDEAS

    as
    1. Hart, Robert A., 1984. "Worksharing and factor prices," European Economic Review, Elsevier, vol. 24(2), pages 165-188, March.
    2. Prescott, Edward C & Townsend, Robert M, 1984. "General Competitive Analysis in an Economy with Private Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 1-20, February.
    3. Terry J. Fitzgerald, 1996. "Reducing working hours: American workers' salvation?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Sep.
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    10. Hansen, Gary D., 1985. "Indivisible labor and the business cycle," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 309-327, November.
    11. Terry J. Fitzgerald, 1998. "Work Schedules, Wages and Employment in a General Equilibrium Model with Team Production," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(4), pages 809-834, October.
    12. Rogerson, Richard, 1988. "Indivisible labor, lotteries and equilibrium," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 3-16, January.
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    16. repec:bla:scandj:v:90:y:1988:i:1:p:45-62 is not listed on IDEAS
    17. Terry J. Fitzgerald, 1996. "Reducing working hours," Economic Review, Federal Reserve Bank of Cleveland, issue Q IV, pages 13-22.
    18. repec:bla:econom:v:54:y:1987:i:214:p:237-48 is not listed on IDEAS
    19. Yoram Barzel, 1973. "The Determination of Daily Hours and Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(2), pages 220-238.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Antonio García Sánchez & María del Mar Vázquez Méndez, 2005. "The timing of work in a general equilibrium model with shiftwork," Investigaciones Economicas, Fundación SEPI, vol. 29(1), pages 149-179, January.
    2. Marimon, Ramon & Zilibotti, Fabrizio, 2000. "Employment and distributional effects of restricting working time," European Economic Review, Elsevier, vol. 44(7), pages 1291-1326, June.
    3. Michael Kuklik & Nikita Cespedes, 2013. "Optimal Taxation and Life Cycle Labor Supply Profile," Documentos de Trabajo / Working Papers 2013-352, Departamento de Economía - Pontificia Universidad Católica del Perú.
    4. Victoria Osuna & Jose-Victor Rios-Rull, 2003. "Implementing the 35 Hour Workweek by Means of Overtime Taxation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 179-206, January.
    5. Felix R. FitzRoy & Michael Funke & Michael A. Nolan, 2001. "Taxation, Unemployment and Working Time in Models of Economic Growth," Discussion Paper Series, School of Economics and Finance 200112, School of Economics and Finance, University of St Andrews.
    6. Victoria Osuna, 2009. "Should we tax overtime, subsidize the wage or subsidize employment?," Working Papers 09.03, Universidad Pablo de Olavide, Department of Economics.
    7. E. Dominguez & M. Ullibarri & I. Zabaleta, 2011. "Reduction of working hours as a policy of work sharing in the face of an economic crisis," Applied Economics Letters, Taylor & Francis Journals, vol. 18(7), pages 683-686.

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