Loosening Hours Constraints on the Supply of Labor: What If Germans Had a Dutch Labor Market?

Abstract

Total employment in Germany is supposed to increase if people could realize their desired working hours. However, this back-of-the-envelope calculation overestimates the effect of loosening hours constraints, because even in a very exible labor market there will exist hours restrictions for certain jobs and occupations. Therefore, I simulate Germans' working hours in a more exible but real world, namely the Dutch labor market. The results indicate that the average weekly working hours of German employees would indeed decrease if they had a Dutch Labor market. Thus, there exists some potential for additional work-sharing in Germany. Furthermore, the match between actual and desired hours of Germans would improve if Germans faced the same hours exibility as Dutch employees. This holds both for men and for women. Another piece of good news is that hours restrictions shrank over time, which means, Germany seems to be moving towards a more exible labor market.

JEL Classification: J22, J23, J24