The Two French Work-Sharing Experiments: Employment and Productivity Effects

This chapter examines workweek reductions experiments in France. Using the 1982 workweek reduction, it is shown that work-sharing policies, per se, do not work. Put differently, they are not apt to work as long as wage subsidies are not offered to the firms. Their impact of employment and production is then shown using the experience of the experiment conducted at the end of the 1990s. Payroll tax subsidies (as well as other types of subsidies) mitigated the negative effects on employment of this last experiment. In the short run, firms that went to thirty-five hours benefited from the policy, in particular low-productivity firms (because payroll tax subsidies were disproportionately directed to them) to the detriment of firms that stayed at thirty-nine hours. Hence, in the short run, employment was redirected to low-productivity firms adopting the policy. Then, in the medium run, the breath of air coming from the subsidies stopped working and the firms that had moved to thirty-five hours started to fail massively, while the survivors appear to have benefited from these deaths.