Worktime Regulations and Spousal Labour Supply

Abstract

We investigate cross-hour effects in spousal labor supply exploiting independent variation in hours worked generated by the introduction of the short workweek in France in the late 1990s. We find that female and male employees treated by the shorter legal workweek reduce their weekly labor supply by about 2 hours, and do not experience any reduction in their monthly earnings. While wives of treated men do not seem to adjust their working time at either the intensive or extensive margins, husbands of treated wives respond by cutting their labor supply by about half an hour to one hour per week, according to specifications and samples. Further tests reveal that husbands' labor supply response did not entail the renegotiation of usual hours with employers or changes in earnings, but involved instead a reduction in (unpaid) work involvement, whether within a given day, or through an increase in the take-up rate of paid vacation and/or sick leave. These margins of adjustment are shown to have no detrimental impact on men's (current) earnings. The estimated cross-hour effects are consistent with the presence of spousal leisure complementarity for husbands, though not for wives.