The French: A 35 Hour Workweek But None The Happier

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A new paper from the IMF examines the impact of the 35 hour work week implemented by the French several years ago. The conclusion… it didn't accomplish anything it was supposed to. Total employment did not increase as anticipated, and the aggregate happiness of the French didn't change.

Some interesting findings from the paper:

  • Many workers took a second job after the law was implemented
  • Many workers moved from large companies to small companies (which weren't required to limit work hours)

Here is an excerpt from the conclusions section of the study.

Our results show that the law increased the proportion of employees with more than one job and increased transitions from large to small firms. A raise in the relative hourly wages paid by large firms changed the composition of the labor force, with an increase in transitions in and out of employment, and an unambiguous decline in employment of individuals working 35 hours or more in large firms before the enactment of the law-the group directly affected by the law. This was not an intended purpose of the French government, who simply aimed at increasing employment. Our empirical strategy does not allow precisely measuring the net effect of the 35-hour workweek laws on aggregate employment, as we lack a control group. But, from looking at the evolution of employment in large and small firms, it seems that the law did not have a significant impact on aggregate employment.

I would expect nothing less from limiting the freedom of people to do what they want. Many on the far left believe that someday people like me will realize the failure of markets and the need for government intervention. But I do recognize the failure of markets in some cases. I just don't believe government can fix those situations. Why not? Because governments don't think about second and third order effects of their policies. In complex systems (like economies) it is incredibly difficult to accurately predict the outcome of new policies, which is why most of them turn out to have unintended effects, just like the french 35 hour work week rule.

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