We study three questions which are important for work sharing to increase employment. First, is there a negative long-run relation between working time and employment? Second, are hours per worker exogenous with respect to wages and employment? Third, can policy makers influence actual hours per worker? We formulate a theoretical model for employment, hours per worker, production, and real wages. A VAR model with cointegrating constraints is estimated by maximum likelihood using Swedish private sector data 1970:1–1990:4. We find (i) no long-run relation between hours per worker and employment, (ii) that hours per worker are endogenous with respect to the estimation of long-run parameters, and (iii) that legislated working time and hours per worker are related to each other in the long run.
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First version received: September 1997/final version accepted: June 1999
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Jacobson, T., Ohlsson, H. Working time, employment, and work sharing: Evidence from Sweden. Empirical Economics 25, 169–187 (2000). https://doi.org/10.1007/s001810050009
- Key words: Work sharing, maximum likelihood cointegration, employment, hours per worker, real wages
- JEL classification: E24, J22, J23