🤖 AI Summary
This study quantifies the increase in total factor productivity (TFP) required to maintain GDP unchanged following a reduction in the statutory weekly working hours from 44 to 36, under the short-run constraint of fixed capital stock. By constructing a short-term macroeconomic structural model and combining TFP calibration with counterfactual simulations, the paper establishes—for the first time under a fixed-capital assumption—a precise multiplier relationship between reduced working hours and necessary productivity gains. The analysis reveals that an 18.2% reduction in working hours necessitates an immediate TFP increase of approximately 8.5% to fully offset the associated output loss. These findings provide a clear, actionable economic threshold for policymakers considering labor time regulations, offering direct and quantifiable guidance for evaluating the feasibility and implications of such reforms.
📝 Abstract
This paper quantifies, within a short-run structural model with predetermined capital, the immediate effects of imposing a cap on formal working hours that reduces the weekly workweek from 44 to 36 hours. The central object is the total factor productivity required to preserve GDP at its baseline level, A_req, defined as the multiplicative factor applied to A_t that equates output under the policy to output in the baseline. In the baseline simulation, the 44 ->36 transition implies A_req ~ 8.5%