The Employment Effects of a Shorter Working Week

Labor organizations currently argue that reducing the standard working week will help lower the high unemployment of the 1980s. Opponents maintai n that this will increase labor costs, and therefore not alleviate un employment. This paper analyzes the employment effects of a cut in ho urs, using the monopoly union and efficient bargaining models of the union and firm. Under various developments of the models, the results are quite consistent: a reduction in hours has employment effects th at are at best ambiguous and very often negative. A puzzle remains as to why trade unions are pressing for shorter hours.