, Volume 35, Issue 3, pp 255–266 | Cite as

Extending working hours: why not work 42 h rather than 38?—a CGE analysis for Germany

  • Klaus Conrad
  • Henrike Koschel
  • Andreas LöschelEmail author
Original Paper


Faced with a record level of unemployment, the present debate in Germany is to extend the weekly hours of work. In this paper the employment effects of an economy-wide increase in weekly hours are quantified on the basis of a computable general equilibrium model for different specifications of the wage setting rule and the use of additional policy-induced public income. The simulation results back the argument of the opponents of longer working time that not more jobs will be created. However, when the higher tax revenues from GDP growth are used to reduce social security contributions, then the claim of the proponents that more jobs will be created can be supported.


Unemployment Labour market rigidities Longer working hours Computable general equilibrium modelling 



We are grateful for valuable comments of a referee made on an earlier version of this paper.


  1. Brunello G (1989) The employment effects of shorter working hours: an application to Japanese data. Economica 56:473–486CrossRefGoogle Scholar
  2. Brunello G (1996) Labour market institutions and the double dividend hypothesis. In: Carraro C, Siniscalco D (eds) Environmental Fiscal reform and unemployment, DordrechtGoogle Scholar
  3. Calmfors L (1985) Work sharing, employment and wages. Eur Econ Rev 27:293–309CrossRefGoogle Scholar
  4. Capros P, Georgakopoulos T, Van Regemorter D, Proost S, Schmidt T, Conrad K (1997) The GEM-E3 general equilibrium model for the European union. Econ Financ Modell 4 (2&3):51–160Google Scholar
  5. EEAG (European Economic Advisory Group at CESifo) (2005) Longer working hours—the beginning of a new trend? Chapter 3. In: Report on the European economy 2005, Munich, pp 51–68. Available via
  6. Faini R, Schiantarelli F (1985) A unified frame for firms’ decisions: theoretical analysis and empirical application to Italy, 1970–1980. In: Weiserbs D (ed) Industrial investment in Europe: economic theory and measurement. Hingham, KluwerGoogle Scholar
  7. Franz W (1984) The current discussion about reduced working time in Western Germany: a survey of the debate. J Inst Theor Econ 140:626–654Google Scholar
  8. Franz W, König H (1986) The nature and causes of unemployment in the federal republic of Germany since the 1970s: an empirical investigation. Economica 53:219–244CrossRefGoogle Scholar
  9. Franz W, Smolny W (1994) Sectoral wage and price formation and working time in Germany: an econometric analysis. Z Wirtsch Sozialwiss 114:507–529Google Scholar
  10. Hart R (1987) Working time and employment. Allen and Unwin, BostonGoogle Scholar
  11. Hart R, Sharot T (1978) The short-run demand for workers and hours: a recursive model. Rev Econ Stud 45:299–309CrossRefGoogle Scholar
  12. Hart R, Wilson N (1988) The demand for workers and hours: micro evidence from the UK metal working industry. In: Hart R (ed) Employment, unemployment and labor utilization, Unwin Hyman, BostonGoogle Scholar
  13. Hunt J (1999) Has work-sharing worked in Germany? Q J Econ 114:117–148CrossRefGoogle Scholar
  14. König H, Pohlmeier W (1989) Worksharing and factor prices: a comparison of three flexible functional forms for nonlinear cost schemes. J Inst Theor Econ 145:343–357Google Scholar
  15. Koschel H (2001) A CGE Analysis of the Employment Double Dividend hypothesis—substitution patterns in production, foreign trade, and labour market imperfections, available via
  16. Lehment H (1991) Lohnzurückhaltung, Arbeitszeitverkürzung und Beschäftigung, eine empirische Untersuchung für die Bundesrepublik Deutschland, 1973–1990. Die Weltwirtschaft, 72–85Google Scholar
  17. Nickell S, Layard R (1999) Labor market institutions and economic performance. In: Ashenfelter O, Card D (eds) Handbook of labor economics 3, 3029–3084Google Scholar
  18. Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung (2003) Jahresgutachten, 2003/2004, WiesbadenGoogle Scholar
  19. Saint-Paul G (2004) Why are European countries diverging in their unemployment experience? J Econ Perspect 18:49–68CrossRefGoogle Scholar
  20. Schmidt TFN (1999) Integrierte Bewertung umweltpolitischer Strategien in Europa: Methoden, eine AGE-Modellentwicklung und Simulationsanalysen. HeidelbergGoogle Scholar
  21. Sinn HW (2004) Why extending working hours will create more jobs. Ifo-Viewpoints, Ifo-Institute MunichGoogle Scholar
  22. Spitznagel E, Wanger S (2004) Mehr Beschäftigung durch längere Arbeitszeiten? IAB Forschungsbericht, 5/2004, Institute for Employment Research, NürnbergGoogle Scholar
  23. Stille F, Zwiener R (1987) Beschäftigungswirkungen der Arbeitszeitverkürzung von 1985 in der Metallindustrie. Deutsches Institut für Wirtschaftsforschung, Wochenbericht 54:273–279Google Scholar
  24. Wagner S, Bach H-U (2005) Arbeitszeiten in Deutschland—Entwicklung und aktueller Stand. Bundesarbeitsblatt 3:4–7Google Scholar

Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  • Klaus Conrad
    • 1
  • Henrike Koschel
    • 2
  • Andreas Löschel
    • 2
    Email author
  1. 1.Department of EconomicsUniversity of MannheimMannheimGermany
  2. 2.Centre for European Economic Research (ZEW)MannheimGermany

Personalised recommendations