June 2012

IZA DP No. 6652: More Hours, More Jobs? The Employment Effects of Longer Working Hours

published in: Oxford Eonomic Papers,, 2015, 67(2), 245-268

Increases in standard hours have been a contentious policy issue in Germany. Whilst this might directly lead to a substitution of workers by hours, there may also be a positive employment effect due to reduced costs. Moreover, the response of firms differs between firms which offer overtime and those which do not. For a panel of German plants (2001-2006), we analyse the effect of increased standard hours on employment. Using difference-in-difference methods we find that, consistent with theory, overtime plants showed a significant positive employment response, whilst for standard-time plants there is no difference at all between plants which increased standard hours and those which did not.