Can work-sharing decrease unemployment while maintaining economic growth? a case study for six world leading economies

Konstantinos Vergos, A. Christopoulos, L. Kosteletou

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Abstract

In this paper we investigate the effects of decreasing weekly working time, known as “worksharing”, on growth and unemployment in the world largest countries. We find that the decrease of standard time of work is associated with a reduction in unemployment in the long run. For every 10% decrease of working time, unemployment decreased by 3,37%. We also find that time-sharing is not associated with decreasing economy growth. Our results provide an indication that countries that promote worksharing policies are associated with decreasing unemployment while being also competitive in the long run. These findings are interesting for policy makers. If the decrease of standard working time leads to a decrease of long-run unempoloyment, then worksharing should be a key to policymaking to promote social prosperity whilst keeping competition at high level. Given the small, if any, cost of worksharing to government budget and the lack of governments to achieve a constistently costly expansionary investment policy, the contribution of worksharing to achieve high employment, while keeping economy growth and government budget at sustainable level may be the main policy tool of economic prosperity in times of crises, given the lack of investment resources during recession. Our findings question the policy rationale behind working time increasing policies promoted by the European Commission and the EU including steps towards amending Working Time Directive 2003/88.
Original languageEnglish
Pages (from-to)108-112
Number of pages5
JournalMiddle Eastern Finance and Economics
Issue number17
Publication statusPublished - 2012

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