Doing more with less has become standard operating procedure for many in the current economic climate. And for some in the wake of France’s 1998 work week reduction, it was in response to a reform that’s still being debated today.

The reform, enacted during socialist Prime Minister Lionel Jospin’s term as head of the government, shortened the statutory work week from 39 to 35 hours, without a reduction in individuals’ pay. In return, firms adopting the reduced hours could claim employer payroll tax cuts of up to 11%.  The policy was phased in by firm size: Firms with more than 20 employees had to implement the reduction by January 2000, while smaller firms had until January 2002.

Analysis by a research team that included Elio Nimier-David, assistant professor of economics in the ILR School, found that while the reform package left employment unchanged generally, there were several large, offsetting effects. Among them: Employment among managers and professionals increased due to work sharing, while lower-skilled workers saw a significant decrease in employment.

Nimier-David is a co-author of “The Effects of a Shorter Workweek on Employment, Output, and Productivity,” a working paper published Oct. 15 by the National Bureau of Economic Research. Other co-authors are Pauline Carry, assistant professor of economics at Princeton University; Claire Montialoux, assistant professor of economics at Sciences-Po Paris; Alexandra Roulet, associate professor of economics at INSEAD; and Nina Roussille, assistant professor of economics at Massachusetts Institute of Technology.

The research team spent nearly five years analyzing this government mandate, which is still the subject of debate in a politically polarized France as the 2027 national elections loom.

Nimier-David said it’s typically hard to obtain causal evidence because, among other reasons, the mandates are usually at the national level, so there’s no way to compare those who are affected by the mandate and those who aren’t. But the government in France rolled out the reduction in two stages, and a rich trove of administrative and survey data made it easier to parse out just how the reduction impacted workers, firms and the economy.

The central question the team sought to answer: Did the 10% reduction in hours lead to more workers in the workforce? Their answer: That depends.

At the upper levels – management and skilled labor – the reform resulted in an increase in employment as planned. Weekly hours fell while pay remained the same. Reduced hours were achieved in multiple ways, including extended holidays .

But for lower-skilled workers, reorganization and a push to produce more in less time resulted in a net drop in employment. This also created a push toward part-time employment, Nimier-David said.

 “Basically, people who were working 39 hours moved to 35, at the same pay. But then people already working 35 said, ‘Why aren’t we getting the same 10% increase in wages?’” he said. “So they moved to 33 hours, and those at 33 moved to 31, and so on. It created a broader shift toward shorter hours, particularly among lower-skilled workers.”

Overall, the authors find that the shorter work week would have reduced employment by 3.8%, but that decline was largely offset by the payroll tax cuts.

On aggregate, the reform led to a large 6% reduction in total hours worked in the economy, but only a modest 1% decline in production. The gap reflects a 2% rise in total factor productivity – a measure of economic efficiency. Those productivity gains, the researchers said, could be explained by, among other things, reorganization and “work intensification” – that is, doing more (work) with less (time).

“There are two things happening,” Nimier-David said. “One is that you reorganize the way people produce – how you perform your task and the kind of tools you use. Then the other part seems to be that people are just working harder. They have to deliver almost about the same output as before, and they have less time to do it.

“So they intensify their work,” he said, “and we find some workers report more pressure and more stress.”

The question of working-time regulation was of interest to the researchers because it’s a question that has resurfaced in every major crisis, Nimier-David said.

“Look at the Great Depression in the U.S., the large unemployment rate in Europe in the ’80s and ’90s after the oil shock, and more recently with the work-from-home revolution after COVID,” he said. “It’s a recurring question.”

The political debate in France, Nimier-David said, reflects a broader question about the role of work in society: Should people be free to work as many hours as they like, or should work-life balance be “mandated” via a shorter work week?

“On the right, the emphasis has traditionally been on individual freedom and the opportunity to work more and earn more,” he said. “On the left, there has been greater emphasis on reducing working time to improve quality of life and allow people more time outside of work.

“That doesn’t necessarily explain the economics, and that’s what we’re trying to do,” he said. “What are the benefits, what are the costs and who is paying for it?”