Les impacts de la réduction du temps de travail. Effets potentiels sur l'emploi et le chômage

Potential Impacts of the Reduction of Working Time
Gilbert Cette and Alain Gubian, using a micro and macro economic approach, describe here the potential impacts on employment and unemployment of the Aubry Law on the the reduction of working time (RWT).
Their analysis shows that the RWT can effectively create permanent jobs provided that its financing neither reduces the profitability of firms (their unit costs of production) nor unbalances the public finances. In other words, the cost of restructuring assistance must be lower than the value of benefits generated by the creation of jobs.
The financial soundness of the RWT depends on gains in productivity plus the re-structuring assistance provided by the state, and the authors put about 40% of the responsibility on the employees. A happy outcome requires that each party find some incentive to cooperation. Business should realize some gains in productivity, stemming in many cases from more efficient use of fixed capital; benefit to the State requires that the creation of jobs and the reduction of unemployment will be translated into lower expenditures and increased revenues. Employees will cooperate if they foresee a satisfying improvement in general well-being.
While structural assistance is indispensable for the RWT to have a significant impact on employment, it remains possible that reduced unemployment will lead to demands for wage increases which would have an inflationary effect. In brief, the authors do not hide the fact that this virtuous measure adopted by the French government is not without risk. More to the point, its long-term benefit depends largely on the successful negotiation of agreements which make winners of all the parties.