The Unequal Effects of Shorter Workweeks: Evidence from France’s 35-Hour Reform
Professor Nina Roussille
Lister Brothers Career Development Assistant Professor of Economics
Massachusetts Institute of Technology (MIT)
What are the effects of a mandatory workweek reduction on employment, pay, and productivity? We study France’s 35-hour reform, a pay-preserving reduction from 39 to 35 hours, paired with payroll tax cuts for low-wage workers. We exploit the staggered implementation of the reform by firm size between 2000 and 2002 and use administrative data and surveys. Following the reform, firm total hours decreased by 5.9%, driven by a shorter full-time workweek and a shift toward part-time jobs. The reform had no net employment effect, but only because the payroll tax cuts offset large job losses. Further, the null employment effect masks unintended distributional consequences. For lower-skill workers, both employment and earnings fell, while higher-skill workers saw the hours reduction fully offset by higher headcount, and their earnings unchanged. Firm output declined by 1%, partly cushioned by a 3% rise in total factor productivity. This drop in value added is borne by profits and lower-skill wage bill.
