December 1, 1996 a new law was implemented in Portugal to gradually reduce the standard workweek from 44 to 40 h. We study how this mandatory reduction affected employment through job creation and job destruction. There was considerable regional, sectoral and firm-size variation in the share of workers who were affected by the working hours reduction. We exploit this variation to assess the impact of the workweek reduction. We find evidence that the working hours reduction had a positive effect on employment through a fall in job destruction.
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We are grateful to the Ministry of Employment, Statistics Department, for access to the QP data. We thank two anonymous referees for helpful comments on a previous version of the paper. Pedro S. Raposo gratefully acknowledges financial support by the Portuguese Foundation of Science and Technology, FCT [SFRH/BD/21906/2005].
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Raposo, P.S., Van Ours, J.C. How a Reduction of Standard Working Hours Affects Employment Dynamics. De Economist 158, 193–207 (2010). https://doi.org/10.1007/s10645-010-9142-5
- workweek reduction
- policy reform
- employment dynamics