France's 35-hour week reform: employment fell among lower-skilled workers, rose among managers

A working paper published on Oct. 15 by the National Bureau of Economic Research analyzes the 1998 French reform that shortened the statutory workweek from 39 to 35 hours without a reduction in pay, according to miragenews.com. miragenews.commiragenews.commiragenews.comOpen source ↗ The authors found that employment overall was unchanged, but there were several large, offsetting effects. Employment among managers and professionals increased, while lower-skilled workers saw a significant decrease.

The paper is titled "The Effects of a Shorter Workweek on Employment, Output, and Productivity". Its authors are Elio Nimier-David (assistant professor of economics in the ILR School), Pauline Carry (Princeton University), Claire Montialoux (Sciences-Po Paris), Alexandra Roulet (INSEAD) and Nina Roussille (Massachusetts Institute of Technology). The team spent nearly five years analyzing the mandate.

Design of the reform and the data

Firms that adopted the reduced hours could claim employer payroll tax cuts of up to 11%. The policy was phased in by firm size: firms with more than 20 employees had to comply by January 2000, smaller firms by January 2002.

Nimier-David said causal evidence is usually hard to obtain because such mandates are typically national, leaving no group of unaffected workers for comparison. The two-stage rollout and a rich set of administrative and survey data made it easier to separate the effects on workers, firms and the economy. miragenews.commiragenews.commiragenews.comOpen source ↗

Employment, hours and productivity

The central question was whether the 10% reduction in hours led to more workers in the workforce. Among managers and skilled labor, employment increased as planned: weekly hours fell while pay remained the same. Lower-skilled workers saw a net drop in employment, as reorganization and a push to produce more in less time took effect. This also pushed employment toward part-time work, Nimier-David said.

He described a cascade: workers at 39 hours moved to 35 at the same pay, then those already at 35 asked for the same 10% increase and moved to 33 hours, and those at 33 moved to 31. The result was a broader shift toward shorter hours, particularly among lower-skilled workers.

The authors find that the shorter workweek alone would have reduced employment by 3.8%, but that decline was largely offset by the payroll tax cuts. In aggregate, total hours worked fell by 6% while production declined by only 1%. The gap reflects a 2% rise in total factor productivity. miragenews.commiragenews.commiragenews.comOpen source ↗

The researchers attribute the gains partly to reorganization and "work intensification", meaning the same output in less time. Some workers reported more pressure and more stress.