Working Time Reduction, Labour Cost, Employment and Inequality - A Review

Following an old economic literature dealing with work sharing, the aim of this paper is to review the theoretical effects on unemployment and inequality we may expect from a working time reduction (WTR). To do so, we begin considering labour demand models and we go through general equilibrium models. We also discuss work sharing together with tax cuts and we include heterogeneous workers. The main conclusion is that the impact of WTR on employment, unemployment and inequality is uncertain, whatever the theoretical framework we consider. For instance, subsidizing labour seems to be a more efficient way to reduce unemployment