Using Alsace‐Moselle Local Laws to Build a Difference‐In

Home , Moselle (department), Var (department)

488 Chemin/Wasmer

In 1998 and 2000, following laws known as Aubry I (which encouraged firms with over 20 employees to reduce working time) and Aubry II (which made working time reduction mandatory), France changed its working time regulation from theofficial 39 hours to 35 hours. This 10% reduction was implemented with no changetothe net monthly wages of Using Alsace-Moselle Local Laws to workers who were employed at this time. Theimplementation of this regulation constitutes a relatively far-reaching and unique experiment Build a Difference-in-Differences from which much can be learned about theunderlyingfunctioning of labor markets in general.1 Theexperience also generated considerable de- Estimation Strategy of the Employment bate in several European countries. Effects of the 35-Hour Workweek Despite the importance of this shock and thepolitical controversy sur- rounding it, there have been few studies based on microeconomic evidence Regulation in France that evaluate theimpact of a working time reduction in France. In our view, this is primarily due to theabsence ofproper identification strategies. Matthieu Chemin, University of Quebec at Montreal Unlikethe United States or Canada, France lacksafederal structure; therefore, most laws anddecrees apply to the entire territory,which makes and CIRPEE very problematic theidentification of appropriate control groups involv- ingfirms or workers unaffectedbytheexperiment. Moreover, a reduction Etienne Wasmer, Sciences-Po Paris and OFCE in working time (hereafter RWT) has been accompaniedby payroll tax exemptions, smoothing ofhours over the year (annualisation in French), and a number of specific collective labor agreements that, together, add to the difficulty ofdisentangling thespecificeffect of RWT. France’s 1998 implementation of the 35-hour workweekhas been The goal of this paper is to provide a methodology that overcomes this one of the greatest regulatory shocksonlabor markets. Few studies identification problem bymaking use of arelativelyunknown French evaluate the impact of this regulation because of a lack of identification strategies. For historical reasons due to theway Alsace-Moselle specificity. France’s territorial organization is less centralized andho- was returned to France in 1918, theimplementation of France’s 35- mogeneous than is generally assumed. For example, for historical reasons, hour workweek was less stringent in that region than in the rest of the region of Alsace and the subregion, hereafter named dee´partement, of the country,which is confirmedbydoubleand triple differences. Yet Moselle have laws that differ from those of the rest of therepublic. Both it shows no significant difference in employment with the rest of areas belonged to Germany from 1870 to 1918 and, upon rejoining France, France, which casts doubtontheeffectiveness of this regulation. retained some favorableelements of the German legal system. In particular, two holidays that are unrecognized elsewhere in the country are preserved in these areas: Saint-Etienne (Saint Stephen’s Day, December I. Introduction 26) and Vendredi Saint (Good Friday). However, when the RWT took The experience of working time reduction in France has been one of effect in 1998 and 2000, firms in Alsace-Moselle decided that bothholidays the most siggypgnificant regulatory shocksimposed on an ygyylarge economy. would be counted as part of the working time reduction. Therefore, the application of theRWThas been less favorableinAlsace-Mosellethan in We would liketothank Philippe Aghion, JohnAbowd,Olivier Blanchard, the rest of France, at least until employee recourses began to be examined Pierre Cahuc, Bruno Cree´pon, Patrick Feeve, Jean-Paul Fitoussi, Francis Kramarz, by various legal courts. Laurence Grisey-Martinez, Chris Pissarides, Christopher Taber, and Philippe Weil for their remarksand comments. Contact the corresponding author, Matthieu 1 Chemin, at [email protected]. Despite the official obligation that wages not be cut in response to a working time reduction, theory indicates that newly hired workers must have faceda [ Journal of Labor Economics, 2009, vol. 27, no. 4] decline in monthly wages, attenuating the law’s impact. Similarly, fringe benefits ᭧ 2009 by The University of Chicago. All rights reserved. to already employed workers mayhave been renegedfollowing the law’s appli- 0734-306X/2009/2704 -0001$10.00 cation in order to restore hourly wages.

487 35-Hour Workweek in France 489 490 Chemin/Wasmer

This is the basis for our identification strategy. We will compare the the 35-hour law across regions did not have any relative employmentt evolution of hours, employment, and wages in France (by which we mean impact. France without Alsace-Moselle) and in Alsace-Moselle. Using data from Enqueˆte Emploi, a Frenchlabor force surveyfrom 1996 to 2003, we are II. Reduction in Working Time able to use a standarddifference-in-differences approach and investigate A. 35 Hours: The Law the differential impact of RWT in France and in Alsace-Moselle. However, this is not as straightforward as it seems: Alsace and Moselle From a legal viewpoint, France’s switch from a 39-hour to a 35-hour have the particular distinction of being the only areas in France that share workweek in 2000 was a complex process, implemented after a lengthy a border with Germany.This is a serious issue in our identification process: negotiation process and severallitigations. Two laws were proposedby the Jospin government, a coalition of socialists, communists, and the during the period under investigation, Germanyfaced arelatively strong Green Party,and were voted on in Parliament. The first, on June 13, 1998 recession that threatened to spill over into Alsace-Moselle. Thus, a simple (known as the Loi Aubry I), was designed to provide firms with strong comparison of these areas with the rest of France is likely to bespurious. incentives to negotiate working time reductions of at least 10% at the In particular, it is possiblethat a rise in relative unemployment in Alsace- firm or industrylevel. Incentives for such reductions were numerous. Moselle could simply bethe resultof Germany’s recession dispropor- Foremost, firms obtained asubsidy for each worker in the firm if they tionately affecting northeastern France. raised employment by at least 6% following a decrease in working time For this reason, we will mostly present triple difference (DDD) esti- and an even larger subsidy for an employment increase over 9%. This mates, wherein theadditional reference groups will consist offirms or subsidy was quite large (between i800 and i1,500 per worker) andde- occupations unaffectedbythe RWT (i.e., firms offewer than 20 employees gressive over time. It was not applicabletoagreements signed after the or independent workers). At this point, it is interesting to note that by second semester of 1999 for firms with over 20 employees (a delay of using a DDD approach,wefind that workinghours in Alsace-Moselle 1–2 subsequent years was granted to smaller firms) in order to speed up rose relative to the rest of France by approximately the amount predicted the transition to the new legal working time. Finally, as an incentive for by theory, despite the fact that Germany was concurrently experiencing firms to reduce working time promptly,the Loi Aubry Ispecified that a recession. This makes us reasonably confident that the difference in the in 2000 (for firms with over 20 employees) or in 2002 (for smaller firms), number of working hours in Alsace-Moselle is exogenous to the German the 35-hour workweekboth would be irreversibleand would be uni- economic cycleand is instead attributabletolegislative differences within formly applied to all firms, even those not having signed an agreement. France. The secondlaw, passed January 19, 2000 (known as the Loi Aubry II), Our paper is organized into six sections. Section II presents France’s enforced the Loi Aubry I by setting theofficial working time at 35 hours RWT experiment and aselective literature review of ex post evaluations per week in all firms, modifying all relevant articles of theCode du Travail. based on eithermicroeconomic data ormacroeconomic models. All such A decrease in working time from 39 hours to 35 hours represents an existing studies have ignored the France/Alsace-Moselle divide. We will 11% reduction in hours workedper week. However, this does not nec- then discuss thespecificity of theAlsace-Moselleexperiment. Section III essarily imply that, at a fixed weekly wageand in theabsence of subsidies, presents a model with which we discuss a number of econometric issues, firms faced an 11% increase in hourly labor costs. Firms also had various such as theselection offirms that entered into early RWT agreements. adjustment mechanisms. For example, one such mechanism was overtime. Section IV provides greater detail of our identification strategy. Since the Before the reform, firms were required to pay acompulsory overtime existence of regionaldifferences is typically ignored in examinations of premium of 25% for the first 8 hours over 39 and then a 50% premium Frenchdata, we devote Section V to providingdetailed evidence that the from then onward.Following thereform, the activation point for the strategy is valid.Inparticular, we show that workers in Alsace-Moselle overtime premium was shifted to 35 hours, and a second activation point worked more relative to the rest of France: the DDD coefficients are was introduced at 43 hours. Figure 1 represents thewage profile before positive and significant over therelevant period. Further, thetheoretical and after the 2000 reform in firms of more than 20 employees until 2003 coefficient (16 hours per year, i.e., 0.35 hour per week worked)isalways (when the overtime premium was eventually reduced; see below). in the confidence interval. In Section VI, we employ theidentification For hourly wages earnedby employees in these firms working 39 hours strategy to measure theeffect of RWTonemployment probability and before and after the reform, labor costs increased by (4 # 0.25)/39 p unemployment incidence. We observe that the differential application of 2.5%. For employees working 43 hours before and after the reform, labor 35-Hour Workweek in France 491 492 Chemin/Wasmer

Fig. 2.—Timing of the 35-hour reform for ﬁrms with greater than and less than 20 employees.

In short, the timing of the RWT was not simpleand can be broken down as follows: 1. Between 1998 and 2000, incentives were provided in order to reduce Fig. 1.—Weekly wage profile before and after the reform in firms with more than 20 working time by 10% or greater (e.g., subsidy increases in cases in employees. The slope of the wage is the base hourly wage (denoted by q for convenience) before the overtime cutoff point (39h or 35h), between the cutoff point and the which working time was reducedby15% and employment ex- second cutoff point (48h or43h), and between 43h and 48h in the postreform pandedby9%; subsidies were also given to firms that claimed that period. they would berequired to fire workers in theabsence of an agreement on working time reduction; finally, after a period of time, all costs increased by %. Finally, for employees working subsidies would disappear, giving incentives to reduce working time 45 hours before and after thereform, the increase in labor costs amounted as early as possible following the first law). to( ) %. In short, the reform made overtime 2. In 2000, the RWT was almost uniformly enforcedbylaw through- more costly,especially overtime exceeding 43 hours. out the territory. It was applieddifferently according to activity The two laws have been widely debated. For example, the Conseil sectors anddepending on renegotiations with the various conven- Constitutionnel (France’s equivalent of the Supreme Court) nullified sev- tions de branches and the timing of theagreement. eral items of theAubry II law. There were also many different interpre- 3. In 2003–4, recourse to overtime was eased and its cost decreased. tations ofhow vacation daysshould becalculated, how overtime should be paid,andhow collective agreements could bypass the law. As late as The number of firms and employees that switched to the 35-hour re- October 2006, more than years after the reform, the Conseil d’Etat gime was recorded on a monthly basis bytheadministration. Here we (another Supreme Court devoted to litigations in the public sector) in- report data that show the progressive switchfor larger firms between 1998 validated acollective agreement in the public health sector as a resultof and 2000, thesudden increase in 2000, and the same process, but with a aconflict with the main law. lag of 2 years, for firms with fewer than 20 employees. Note that the Jospin’s left-wing coalition was defeated in the 2002 presidential elec- firms withfewer than 10 employees have not yet been subject to any tions. In 2003 and 2004, the new right-wing Parliament votedfor two working time reduction. Figures 2 and 3 provide an overview of the timing additionallaws that imposed constraints on overtime wages. In particular, of thechange for the firms with more than andfewer than 20 employees the overtime costs were reducedfrom 25% to 10% in 2003; during the (fig. 3 uses a logarithmic scale). followingyear, the legal working time (1,600 annualhours) was augmented to 1,607 hours with an additionalday of workfor all French B. A Selective Literature Review firms and administrations (usually on Pentecost) in order to finance health The literature on work sharing is vast andhas typically established a spending for the elderly. negative employment effect (Rosen 1968; Ehrenberg 1971; Calmfors and 35-Hour Workweek in France 493 494 Chemin/Wasmer

and sign agreements with their workers. Cree´pon, Leclair, and Roux (2004) attempt to find an instrumental variable that would affect the decision to reduce working time without having an effect on economic outcomes. They use the predicted amount of Aubry II subsidies that firms would have obtainedper worker had they switched to the 35-hour workweek. However, the source of variation in the amount of Aubry II subsidies per worker across firms is correlated with theshare oflow- andhigh- wage workers. Comparingfirms with more or less Aubry II subsidies maybeequivalent to comparingfirms with more or fewer low-wage workers. Firms with more or fewer low-wage workers differ systematically in unobservableways. For example, one mightargue that firms with a great number oflow-wage workers are more likely to be unionized and Fig. 3.—Timing of the 35-hour reform for firms with greater than and less than 20 to switch to the 35-hour reform. Additionally, a considerable amount of employees (logarithmic scale). economic literature argues that unions have an independent impact on employment andproductivity.Therefore, the amount of Aubry II sub- Hoel 1988; Hunt 1999; Cree´pon and Kramarz 2002; see also Marimon and sidies a firm receives per worker may not be exogenous and then may Zilibotti [2000] for a detailed theoretical analysis). The purpose of this not beavalid instrumental variable, although the direction of the bias is paper is not to systematically survey thetheoretical and empirical argu- unclear. ments for work sharing. Rather, we aim to survey various evaluations of An alternative strategy was implemented in a recent paper by Estevaao the French experiment. Thethree most comprehensive surveysonthe35- and Sa (2006). They investigate theimpact of a 35-hour workweek on hour experience are completed by Cahuc (2001), Askenazy (2005), and severaldimensions (stress, dualjobholding,share of employment in firms, Kramarz et al. (2008). Cahuc and Askenazy classifythe various available average pay of newly hired workers, employment) by exploiting the dis- estimates of the 35-hour experience into two categories: approaches based tinction between small andlarge firms regarding the timing of the im- on macroeconomic modelsand approaches based on microeconometric plementation of thereform. As we argue in the paper, their methodology evidence. Those based on macroeconomic models depend on Keynesian is a usefulgatewayfor future research since it considerably improves on effects. Their estimates of theemployment effect typically depend on time- previous methodologies that were based solely on macroeconomic models series evaluations andhave been severely criticized. Further, both authors anddata. However, in order to draw conclusions on theimpact of a argue that microeconomic data are the most informative and maybethe working time reduction on the economy and to infer causality, their iden- only rigorous methodology to employ in such a context. Theobjective tification strategy also requires that the time effects for small andlarge is to compare the employment evolution offirms that switched to the firms are identical over the period of interest and that the responses of 35-hour regime (treatment group) with that offirms that did not switch small andlarge firms to a regulatory shock on hours are the same. In our (controlgroup). Unfortunately,itislikely that the treatment of the treated paper, we nest this identification strategy in offering triple differences. In groupdiffers from the treatment of the controlgroup;thus, the key addition to the previous methodology,wecompare large firms affected difficulty consists in dealing with theendogeneity of the agreement at the by the 35-hour workweek withlarge firms affected in a milder wayby firm level on the 35-hour regime. Matching methods are a potentially theregulation (i.e., large firms in Alsace-Moselle). Compared to the meth- powerful methodology with which to build a controlgroup; however, as odology employed by Estevaaoand Sa, we do not focus on the various explainedbyAskenazy (2005), these methods account for only selection dimensions (stress, dualjobholding, etc.), although our methodology can in a 35-hour agreement based on observables. This raises the question as easily beadapted to address those questions. to why some similar firms selected into the 35-hour reform but others did not. III. A Model of Working Time Reduction In the latter survey by Kramarz et al. (2008), the authors explore the impact of the 35-hour reform with a similar methodology. They recognize A. Setup that their analysis precludes causality since it is difficulttofind amodel Our goal in this section is to provide a simple analytical model of a that explains when and why firms decided to switch to the 35- hour regime working time reduction applicable to the French case. In particular, our 35-Hour Workweek in France 495 496 Chemin/Wasmer setup includes both extra overtime costs for employers (weekly wages are convex in hours) and overtime costs affected by legislation changes. Other aspects of working hour regulations, such as the impact oflabor costs on prices and on subsequent demandfor producedgoods, are ignored.In order to providethe simplest illustration of theempirical challenge facing most evaluations of the 35-hour law, we take a proponent’s viewpoint and assume the most favorable case in whichfirms face a fixeddemand for their output and,thus, must supply a fixed number ofhours, denoted by H. It would be very easy to relax such an assumption and assume that H depends negativelyonthe cost oflabor due to theelasticity of the demandfor goods. Richer specifications can be found in Calmfors and Hoel (1988). We denote by h the number ofhours per worker andbyN employment in a given firm. Thus, the firm chooses hours and employment subject to

hN p H.

The firm’s objective is to minimize its total production cost . To Fig. 4.—Equilibrium determination of hours worked per employee before and after the reform, in the absence of other government intervention. account for the fact that employment andhours are not perfect substitutes, this cost can be broken down as follows: more costly,and thus the firm optimally raises employment and reduces p ϩ C(h, N) w(h)N dj N, hours worked, to a point . However, theemployment effect may not be large enough. First, even where is the cost per worker in firm j (which could be interpreted as j if we assume that H does not vary with the increase in labor costs, hB a coordination cost), and the function is an increasing, convex weekly may still beabove the target h0. Second,the totaldemandfor hours at wage profile. Denote by the elasticity of the wage the firm level maydecline: iflabor costs raise production prices and the profiletowages. demandfor goodsiselastic, H itself will decline. This is why,inthe Different firms mayhave different workplace organization andhence process of reducing working time, the government added asubsidyto a larger or a smallerj . Replacing h by in the cost function, we have firms that was approximately proportional to hirings. Thus the cost func- theobjective of the firm as follows: tion of the firm is augmented by a (negative) term , where S p ϩ is the per-worker subsidy and a is a possibly lump-sum transfer. After min C(H/N, N) min w(H/N)N dj N, NN taking the first-order conditions, this subsidy simply moves the horizontal line (cost per employee) to a lower level (see fig. 5). whichleadstoasimple first-order condition: In summary, (1) even with a constant volume ofhours H, the em- ␧ Ϫ p d ployment effect can be lower than expected iffirms prefer to choose an w(h)( 1) j . p intermediate level of hours (e.g., a number between and hA Figure 4 illustrates the determination of theequilibrium hours as the 39). (2) Thevalue of H itself maydecrease as a resultof the rise in labor intersection between the curve( )( ) and the horizontal linej in a costs. In this case, the government needstosubsidize employment with point . The higher the cost per employee, the higher the choice of hours apositive S per employee. hA and thus the lower employment . As figure 4 further illustrates, a reduction in legal working time that makes overtime more B.Other Issues: Heterogeneity of Workers and Self-Selection of Firms costly will raise thewage profile w to wϩ after a given threshold point It is possiblethat workers are heterogeneous in terms of their prefer- h0,which can bethoughtof as the new legal working time, for example, ences for leisure. Here we simply modeled the labor demand side, but 35h. With this new wage profile, overtime above the legal threshold is there might be interesting effects of the reform on the supply side as well. 35-Hour Workweek in France 497 498 Chemin/Wasmer

Themodel also points out some dimensions ofheterogeneity at the

firm level, illustrated by the fact thatj depends on the firm. This simply means that firms have a different hours-employment trade-off and,thus, react differently to changes in overtime regulations. For theemployment impact of a policy changetobethe same across all firms despite different

dj, we require that the proﬁle be linear, a condition unlikely to be met. As we will discuss below, our identiﬁcation strategy is immune to these problems.

IV. Identification Strategy: The 35-Hour Reform in Alsace-Moselle A. Detailsof theAlsace-MoselleExperience As noted earlier, theimplementation of the 35-hour reform was, to a large extent, nationwide, making theidentification of the causal effect difficultatthe macroeconomic level. Simply comparing unemployment rates before and after thereform would confound theimpact of thereform with the ongoing macroeconomic trend. In contrast, an identification based on regionaldifferences is able to capture thereform’s causal effect. Fig. 5.—Equilibrium determination of hours worked per employee after the reform and A historical accident provides a regionaldifference in theimplemen- with government subsidies S. tation of thereform between Alsace-Moselleand the rest of France. Figure 6represents France, where Alsace-Moselle corresponds to three dee´par- In particular, in a competitive market, firms and workers would sort tements in the northeastern part of France, those with numbers 67, 68 according to preferences: workers preferringlow workhours would go (Haut-Rhin and Bas-Rhin), and 57 (Moselle). As notedpreviously,Alsace- to firms offeringlower workhours and, similarly, for those workers Moselle has had two supplementarypublic holidays (December 26 and preferring a greater number of workhours. However, by later investi- Good Friday)ineffect since theadoption of the German legal codein gating the sampleof only full-time workers, we limit theimportance of 1890. Insofar as they were opportunistically convertedby employers into variations in workers’ preferences. Therefore, in a first order, our model theRWT,the amount of work supplied in firms decreasedless in Alsace- without workers’ heterogeneity captures the actual effects in the data. Of Mosellethan elsewhere. course, it may also bethe case that workers within the full-time group There is clear anecdotal evidence confirming this phenomenon. For also have different preferences. Some may want to move to a 35-hour example, Laurence Grisey-Martinez, a lawyer at the Institut du Droit workweek,whereas others mayprefer to maintain their 39-hour work- Local Alsacien-Mosellan, an institute in charge of raising awareness about week. Our view is that the preferences over working time for firms and thespecificities oflocal Alsace-Moselle laws, writes about this phenom- for workers are subject to an externality:if everyone works39hours, it enon in the Revue du Droit Local (no. 44, June 2005). In this instance, is more costly for the firm to deviate for one worker.Inthis way, firms a case was broughttothe attention of the courts in 2002 in which the do not want to have too manydifferent contracts withdifferent hours letters RTT (the French translation of RWT) were written on the calendarr worked.With such an externality,the possibility of a “compensatingdif- of a firm for the following December 26. ferential”ofdifferent workinghours in different firms is limited in prac- Theemployees, havingbeen stripped of an “RWT day,” questioned the tice. Similarly, if everyone works35hours, it may be more difficult for legitimacy of employers “using” the RWT on a day that is, according to a worker to betheonly one to work 39 hours. Burdaand Weil (2005) Alsace-Moselle’s locallaws, deemed a statutoryholiday. Finally,onOc- have a nice theory that addresses such externalities and implications for 2 the regulation of working time. in working hours again makes the iso-cost curve more convex since is more curved. Hence, optimalhours are reducedfor each given worker. The main mes- 2 In a model withheterogeneous workers, firms would indeedfix different sage of themodel is therefore unchanged.The net effect of thereform on hours hours, corresponding to a tangency point between iso-utility, a concave curve in maybe lower than in theabsence of workers’ heterogeneity, but this is not the space (w, h), and an iso- cost line, a convex curve in that space. A legal reduction necessarily always the case. 35-Hour Workweek in France 499 500 Chemin/Wasmer

hour reform correspondstoareduction of 4 hours per week throughout the 46-week work year, for a total reduction of 184 hours. Therefore, there is a 9% variation in the impact of the 35-hour reform in Alsace- Moselleasopposed to the rest of France. As 16 hours per year correspond to 0.35 hour per week, workers in Alsace-Moselle were expected to work 0.35 hour more than workers in the rest of France in 2001 relative to 1999. Also note that one expects to find two different types offirms and workers in the data: those with a strict “per-week”application of the 35- hour reform and those with an annualization of the hours worked. For those with a strict per-week application of thereform, we expect workers in Alsace-Moselle to work the same number ofhours as in the rest of France every week exceptonthe two relevant weeks (December 26 and Good Friday)and except in 2001–2. For those whotabulate hours an- nually,weexpect to observe fewer hours worked in Alsace-Moselle for all weeks on average exceptin2001–2.Therefore, to account for the disparitybetween these two groups, the best measure ofhours to be considered is the usual number of hoursworked.Analternative measure (number ofhours workedlast week)will be a more noisy measure. Finally, note that, given that firms were receiving subsidies, our paper is about theeffect of the combination of 35-hour reform and thesubsidies, like most previous empirical studies of the 35-hour reform. However, subsidies in both France and Alsace-Moselle were calculated in thesame way.Therefore, a difference-in-differences approach cancels out theeffect of subsidies and measures only the differential application of thereduction in working time. This is an additionaljustification of our strategy.3

Fig. 6.—Map of the 95 French dee´partements. Alsace-Moselle are dee´partements numbers B.The Pros and Cons of This Identification Strategy 57, 67, and 68 in the northeastern part of France. In previous sections of this paper, we extensively discussed the various firm-level selection issues that makethe evaluation more difficult. How- tober 23, 2002, the local council(called prud’hommes de Metz) stated that ever, our difference-in-differences approach addresses these concerns by “December 26 must be considered a bank holiday as per the special dis- comparingfirms that switched to the 35-hour regime in Alsace-Moselle positions of the locallaws in Alsace-Moselle, this day cannot be counted to firms that switched regimes in the rest of France. Therefore, the only asareduction of working time (RWT)” (Grisey-Martinez 2005, 2). difference between these firms is that, for historical reasons, the 35-hour This is the basis of our identification strategy: between 2000 and 2002, reform has been implemented in a milder way in Alsace-Moselle. Of some employers in Alsace-Moselle attempted to attenuate the impact of course, firms in Alsace-Mosellemight haveasystematically different dj RWT by includingholidaysaspart of thereduction in working time, compared to firms in France, but the outcomes offirms in Alsace-Moselle thereby attempting to integrate them into the less favorableregime of are differencedbefore and after thereform so as to precludeany of these France’s common law, Code du Travail.Asthese two additionalholidays systematic differences. Another problematic assumption with a difference- are not mentioned in theCode du Travail,this was a relatively easy task in-differences approach is the “common time effects” assumption: in the for Alsace-Moselle employers, at least up until the local council established absence of thereform, firms in Alsace-Moselle may have evolveddiffer- a jurisprudence. entlyypcompared to firms in the rest of France. To address this concern , It follows that we should observe a weaker impact of the 35-hour reform in Alsace- Moselle: 2 days represent 16 hours of work per year. The 35- 3 We thank a referee for this point. 35-Hour Workweek in France 501 502 Chemin/Wasmer we will present DDD estimates, wherein theadditional reference groups hours p a ϩ b ϩ g (Alsace-Moselle) # (2003) will be based on those occupations or firms unaffectedbythe RWT (i.e., ijt j t 1 ijt ϩ # independent workers or firms withfewer than 20 employees). g2 (Alsace-Moselle) (2001–2)ijt A last concern is that our identification strategy is based on an impact ϩ g # that has thus far not been documented, namely,the differential application 3 (Alsace-Moselle) (1999–2000)ijt of the 35-hour reform in a particular region of France. This is why we ϩ ϩ ϩ vXijthjob ijtu it ,(1) now check that the shock could indeed be detected in hours actually worked. where i correspondstoindividual i, j to department j, and t to year t; the dependent variablej is the number of hours usually worked per weekbyindividual i (the sample is restricted to employedfull-time in- V. Robustness and Falsification of theIdentification Method 5 dividuals); ajtare department fixed effects (95); are year fixed effects # A. Sample (seven); (Alsace-Moselle) (2003)ijt is a variablethat takes thevalue one Our sampleisbased on France’s Labor Force Survey,or Enqueeˆte Em- if individual i worksinAlsace-Moselleand is interviewed in 2003; (Alsace- # pploi. We used the annual representative cross sections of the population Moselle) (2001–2)ijt is a variablethat takes thevalue one if individual i worksinAlsace-Moselleand is interviewed in 2001 or 2002; and (Alsace- between 1996 and 2002, to which we addeddata from the 2003 cross Moselle)#(1999–2000) is a variablethat takes thevalue one if individual section. The latter has a different design but similar questions, thus making ijt i works in Alsace-Moselle and is interviewed in 1999 or 2000. Therefore, it compatible with the previous data waves. As focusing solelyonthe thereference period is between 1996 and 1998. The coefficient of interest data for the years 1996–2002 did not change our results (availableon is g ,which measures therelative increase in hours workedbyindividuals request), we present only the results obtainedfrom the most exhaustive 2 in Alsace-Moselle after the reform. If the identification strategy is correct, data set of 1996–2003. this coefficient should be equal to 0.35, as stated above: 2 days, or 16 Appendix tableA1reports summary statistics. It is also important to hours, per year correspond to 0.35 hour per week over the year. A co- note that, in contrast to other countries in which common law applies efficient g1 not significantly different from zero would be consistent with and contracts are less specific, Frenchlabor laws require labor contracts the fact that the 2002 decision by the local council(prud’homme de Metz) to be very explicit regarding the hours, pay,and tasks performedby effectively forbadethe practice of converting public holidays into RWT employees. As a consequence, when they are interviewed,employees have daysand effectively canceled theregionaldisparity in theimplementa- precise knowledgeregarding the number ofhours they usually work and tion of the 35-hour reform. The introduction of the variable(Alsace- 4 # the number ofhours they workedduring the previous week. Moselle) (1999–2000)ijt allows us to test the common time effects assumption. This assumption states that treated individuals, had they not B. First Check: A DoubleDifference Approach been treated,should evolve in the same way as nontreated individuals. A coefficient g not significantly different from zero means that prior to the For this first check, a simple difference-in-differences (DD) strategy is 3 reform there was no significant difference in the evolution of individuals used according to the following framework: within and outsideof Alsace-Moselle, confirming the common time effects assumption. Additionally, 14 control variables (five age dummies, sex, size of the household,and seven diploma dummies) and 30 occupation fixed effects are included in the analysis. 4 We thank JohnAbowdfor making this point to us. In confirmation of this notion, we examined the surveyfrom 2003, in which the data are continuous throughout the entire year, whereas in earlier years, interviews were conducted 5 We considered only full-time workers because thetheoretical effect of an in March. In 2003, we found that workers reportedhaving worked 27.43 hours increase of 0.35 hour for Alsace-Moselle workers is calculatedfor full-time work- on average during the previous week in Alsace-Mosellewhen that week included ers. There are 1.4 million individualsinthe database. Of these, only 627,820 either Good Friday or Saint Stephen’s Day. In those same weeks, they reported individuals are employed, with 466,742 employed as full-time workers. There are 35.48 hours on average during that same weekfor workers in the rest of France. 111,215 part-time workers; a further 49,863 individuals have an unreported work This is reported in app. table A1. These results are indicative of the precision of duration and were thus droppedfrom the analysis. We repeated all analyses with hours reporting by employees: the reporteddifference in this example is exactly the full sampleoffull-time and part-time workers, and results do not vary, prob- 8 hours, or an average working day. ably because of the low number of part- time workers. 35-Hour Workweek in France 503 s l d 8 0 7 ) Standard errors are clustered at the level of the department to take into ** ) ) ) 4 s ) dua i 21 0 7 ecte ( v 6 DD .67 .12 .40 i . .9608 account issues of serial correlation within a department, the unit at which .2 ff ( ( ( 5 d Ϫ A

thereform is implemented (Moulton 1990) that may arise in a DD es- In timation (Bertrand,Duﬂo, and Mullainathan 2004). Conley and Taber *

(forthcoming) further discuss the issues arising in a DD estimation when * 5 7 2 ) ** * ll ) ) )( ) ) ) ) 5 0 13 1 u 6 0 7 5 726 .174 –5 the treated group and the number of policy changes are small.They show ( F 1 2 0 4 .20 .29 .27 .18 .66 .23 .4 . . DDD: ( ( ( Ϫ that the difference between the estimated and true coefﬁcients is equal to Ϫ the difference of the sum of the disturbance terms for the treated unit s d before and after theimplementation of the policy.This may not tend l 6 ) ** )( )( ) 2 23 ) dua ecte i 0 5 735 . toward zero when the treated group is small, especiallyif there are time- 5 ff ( v 1 0 DD .29 .20 .18 i .4 . ( ( ( d varyingdepartment-speciﬁceffects from 1996 to 2003, the time period Ϫ n Una of our sample.6 In addition to clustering at the level of the department, I :

we also apply the Conley-Taber methodology to find confidence intervals s d l e d * 5 4 ) * * for our results. This methodology basically builds a confidence interval k )( ) 2 ) ) dua i le 0 4 ecte ( v p DD .68 .40 i .7 .11 .919

for theDDcoefﬁcient by estimating theempiricaldistribution, in the ff ( ( ( d Ϫ A am In controlgroup,of the difference of the sum of the disturbance terms for S the unit before and after theimplementation of the policy.Wewill sys- * tematically report the conﬁdence intervalsinthe text. * 4 5 7 ** * ) )( ) )( ) ) )( 0 7 ll ) 2 u 3

Table1presents the results of this DD approach.Incolumn 1, the –2 ( 0 36 F .28 .48 .52 .22 .51 .66 . . .1593 .2142 . .7538 .75 .3084 .1638 1 e on Hours Wor DDD: ( ( ( ( ( 1 ( Ϫ Ϫ sample is restricted to workers in occupations affectedbythe 35-hour ll Ϫ reform. Indeed, not all occupations are affected by the regulation: typically self-employed workers were left unaffectedbythe 35-hour law. The re- s on * ** i ) )( ) 41 sults are fairly similar to what we expected: g2, the coefﬁcient in front of ) ) ected sace-Mose 317 9 l 2 0 1 ff ( .24 .65 . .45 # .4308 . DD

(Alsace-Moselle) (2001–2) , is equal to 0.38 and is statistically signiﬁ- a 1

ijt ( Ϫ Ϫ n Ϫ cant. Note that this correspondscloselytothe predicted value of 0.35 U Occupat (see the p-value in table 1). This means that affected workers in Alsace- k orminA s f on 7 i *( 6 ) ) )( )( )

Note that we will mostly present triple differences, which controlfor the per Wee 566 1 ected 2 ( .19 .17 .23 . .3805 .142 Yes Yes Yes Yes Yes Yes Ye DD d ( ( ( presence of time-varying department-specificeffects from 1996 to 2003. Addi- ff ( e Ϫ A tionally,wecluster the standard errors at a finer level,the sampling stratum, i.e., k thewell-defined neighborhoodsinwhich all households are interviewed.There Occupat are 238 such clusters in Alsace-Moselle. Results do not change and are available e 35-Hour Re yWor d h ll

on request. The occupations affectedbythe 35-hour reform are cadres de la t d fonction publique; professeurs; professions scientiﬁques; professions de l’in- f d affecte ( formation, des arts, et des spectacles; cadres administratifs et commerciaux ecte ff # a ) d’entreprises; ingee´nieurs et cadres techniques d’entreprises; instituteurs et assi- ) ( ) affecte # milee´s; professions intermeediaires de la santee´ et du travail social; professions in- ( ) ) 95 ( # ) terme´diaires administratives de la fonction publique; professions intermeediaires ) er Version o e: Hours Usua

administratives et commerciales des entreprises; techniciens; contrematres; agents h ld bl 2003 2001–2 1999–2000 1999–2000 2003 2001–2 ( ( ( ( de matrise; employee´s civils et agents de service de la fonction publique; policiers ( ( # # # # # # rowt ) ) ) ) ) )

et militaires; employee´s administratifs d’entreprises; employees de commerce; ouv- g eMi e ll h )

riers qualifiee´s industriels; ouvriers qualifiee´s de type artisanal; chauffeurs; ouvriers t s l DP qualifiee´s de la manutention, du magasinage, et du transport; ouvriers non qualifiees f G ua ent Varia d d de type industriel; ouvriers non qualifiee´s de type artisanal; and ouvriers agricoles. # ivi e1 d artment fixed effects

The occupations unaffectedbythe 35-hour reform are agriculteurs, artisans, com- der sace-Mose p() p r bl l in individuals)individuals) .771 epen o a mpact o Alsace-Moselle Alsace-Moselle Alsace-Moselle Alsace-Moselle Alsace-Moselle mercc¸ants et assimilee´s, chefs d’entreprise de 10 salariee´s ou plus; and professions A ( T I D ( ( ( B De ( libeerales. (

504 506 Chemin/Wasmer - e e e e 5 t r e our enc h h

, and Moselle worked 0.38 hour more per week than their counterparts in ected t o o y est a ff 6 286 f the 35- ﬁd , r 0

.21 France in 2001–2 compared to 1996–98. Thus, the 35-hour reform was y te ea e 35- h h ue o l indeed milder in Alsace-Mosellethan in the rest of France. This difference fin er con yt b -va

p g

ts o disappears in 2003 since is not significantly different from zero, which db 1 -Ta e n ted to t iduals dumm h e In col. 1, the sampl i ey l ecte c was expectedbecause of the decision bythe local council(prud’homme st ff trol variables (five ag 547 53 ffi , ns unaffected b de Metz). The common time effects assumption is valid since g isnot

35 i 3 36 . . eCon rowth. In cols. 3 and 6, 9 g h atio p e coe signiﬁcantly different from zero. s , where affected individuals is p le is restric i ) p DP n sectors a est i G 6. Th r e text t d h te # d

n C. Second Check: A TripleDifference Based on Affected Occupations n a a fin 262 458 , , 36 to .3 . A falsiﬁcation exercise is presented in column2of table1.Weshould s n l e i oyees l c co see no difference between Alsace-Moselleand the rest of France for in- fﬁ so report in t l affected individuals

( dividuals in occupations unaffectedbythe 35-hour reform. Indeed,col- le is restricted to occu # 35 in p . )

ear dummies and the affected indiv umn 2 of table1shows that the difference between Alsace-Moselleand y test coe p - t ) 6 .11 . 0 285 405 the rest of France is not significant for individuals working in unaffected , e 0 2001–2 .2 h ( t occupations. f # oying over 20 emp epartment. We a l As notedpreviously,Alsace and Moselle are theonly French areas that ue o fd l o va l share a border with Germany. Many French workers cross the border to - p eve l rms emp find work in Germany.Thus, a particular macroeconomic cycle in Ger- 547 53 fi , e 36 h affected individuals ( ations). In col. 2, the sam many could significantlyaffect performance in Alsace-Moselle. As a con- p at t # ) d ing in sequence, we would then run the risk of confounding theimpact of the k

the 35-hour reform, zero otherwise. In col. 4, the sam reform with a particular event that might have taken place in Germany wor ustere 2001–2 l y ( d # are included. The

n at the same time. The inclusion of (Alsace-Moselle) (1999–2000) con-

ation ﬁxed effects are included. Column 7 adds border ijt # ) a y p , seven interaction dummies between 074 458 , eses, c y stitutes a ﬁrst step in showing that there is no systematic difference in .41 . h orm,

f the evolution of Alsace-Moselleand the rest of France over time. All the information can becollapsed in a DDD approach,which compares in- ation affected b our re p h dividuals within Alsace-Mosellewho are more or less affectedbythe Alsace-Moselle (

e 35- 35-hour reform whileatthe same time exposed to the same German h 473 88 7 , 1 errors are in parent yt . Yes Yes Yes Yes Yes Yes Yes macroeconomic trend.This strategy relies on the assumption that all oc- d db ar cupations in Alsace-Moselle are equally affectedbythe German macro- d loma dummies), and 30 occu ecte

p economic cycle. ff ations). In col. 3, the coefﬁcient of interest is (Alsace-Moselle) p d Column3of table1presents the DDD results. The“affected individual” ust stan b dummy variable, equal to one if theindividualhas an occupation affected ) ﬁxe the 35-hour reform (see n. 6 for the list of such occu inter- ations and the affected individuals dumm y ts. Ro l s p by the 35-hour reform, zero otherwise, is interacted withdepartment f y 35 in cols. 1, 4, and 7 and . #

artments and the affected individuals dumm ﬁxed effects, year ﬁxed effects, and (Alsace-Moselle) (2003)ijt,(Alsace- p p

) # #

cient o Moselle) (2001–2)ijt, and(Alsace-Moselle) (1999–2000)ijt. The coefﬁ- ing in occupations a k fﬁ ual to one if the individual has an occu cient of interest is the one in front of (Alsace-Moselle)#(2001–2)# q 2001–2 ( ) s wor

east squares resu (affected individuals) .This coefﬁcient is signiﬁcantly positive and is ap- l

7 ijt ations affected b l # ( ) p ua d

-test coe proximately 0.75, although the theoretical coefﬁcient 0.35 falls within the es (14) Yes Yes Yes Yes Yes Yes Yes ld. affected individual t affected individuals ( ( o ivi ects bl inary b d d

ff confidence interval(see the p-value in thetable).This is a confirmation # # he e t in n ) fixed effects) fixed effects No No No No Yes Yes No No No No Yes Yes N N Or 35 .84 .28 . f . d varia y y s (in nificant at 1%. d that the impact of the 35-hour reform was indeed milder in Alsace-Moselle l nificant at 5%. g l te (affected individuals dumm xe atio ation fixed effects (30) Yes Yes Yes Yes Yes Yes Yes g ua h p p p fi d ue o ects No No Yes No No Yesthan No in the rest of France. Alsace-Moselle # ig l artment Significant at 10%. ( ote.— ff *Si ** Si p ivi hl dumm est e dumm bservations 370 ccu ccu * * * N e ontro 2 dichotomous variable e d ear Standard errors are clustered at the department level. Results hold when -va ig ummies, sex, size of the household, and seven di our reform (see n. 6 for the list of such occu 0 interaction dummies between occu eform). In col. 5, the sample is restricted to the unaffected individuals. In all columns, 95 department fixed effects, eight year fixed effects, 14 con est n nteraction dummies between de ntervals to correct fors the restricted small to number occu of treated departments. The dependent variable in all columns is the number of hours usually worked per week. 3 h a i r d i R i i h ppp O Y D O Year C O t standard errors are clustered at the less aggregated level of the sampling

505 35-Hour Workweek in France 507 508 Chemin/Wasmer stratum. Following the Conley-Taber methodology, we find that the in appendix table A2. We may also combine these three triple differences DDD coefficient is 0.73 (close to the coefficient of 0.75 in thetable) and based on affected occupations, affectedfirms, and affected sectors in a that the confidence intervalfor this coefficient is [0.18, 1.73] at the 90% single triple difference. level and [0.09, 2.14] at the 95% level.Wemay thus be confident that the In column4of table1,the sample is restricted to individualsemployed significance of our results is not driven by the inadequacy of theasymp- in an affected occupation, in an affectedfirm, and in an affected sector. # totic assumption in our study. The coefficient in front of (Alsace-Moselle) (2001–2)ijt, g2,isequal to 0.92 and is statistically significant. This coefficient is slightly higher than D. Robustness III: A TripleDifference Based on Affected Occupations, expected.Incolumn 5, the sample is restricted to individuals working in the Size of Firms, and Sectoral Collective Agreements occupations unaffectedbythe 35-hour reform, or working in firms em- In this subsection, we refine the triple differences by further restricting ployingfewer than 20 employees, or working in sectors unaffectedby the treatedgroup according to the size of the firm and the sector of activity. the 35-hour reform. There is no significant effect of thereform, as expected.Incolumn 6, the coefficient of interest is (Alsace-Moselle)# As noted above, theAubry I law specified that in 2000 (for firms with # over 20 employees) or in 2002 (for smaller firms), the 35-hour workweek (2001–2) (affected individuals)ijt, a DDD coefficient. This coefficient would bothbe irreversibleandbe uniformly applied to all firms, even measures therelative increase in hours workedfor affected as opposed those not having signed an agreement. Therefore, in order to capture the to unaffected individuals, in Alsace Moselle compared to the rest of France, and in 2001–2 compared to 1996–98. The coefficient in column causal effect of the 35-hour reform, we could compare individuals working 6 is significant and positive (0.75), and thetheoretical coefficient 0.35 still in firms with more than 20 employees to individuals working in firms falls within the confidence interval.Weobtain the same high significance withfewer than 20 employees, in Alsace-Moselle compared to the rest levelfor the coefficients of interest with alternative clusters (“sampling of France, and in 2001–2 compared to 1996–98. This strategy would rely stratum”) or without any cluster (results available on request). TheDDD onthe assumption that firms with more or fewer than 20 employees in Conley-Taber coefficient is 0.66 (close to the coefficient of 0.75 in the Alsace-Moselle are equally affectedbythe German macroeconomic trend. table), and the Conley-Taber confidence intervalfor this coefficient is Appendix tableA2replicates the analysis performed in table1andfinds [0.007, 1.47] at the 90% level. similar results when undertaking this DDD strategy. There are also important differences across sectors of the economy, E.Robustness and Falsification IV stemmingfrom local collective labor agreements (conventions collectives) that regulate all aspects of work.Acollective agreement is an agreement There is an alternative way to account for economic cycles from other negotiatedbetween employers and trade unions in order to clarify general countries (i.e., Germany). In particular, one could estimate a simple double dispositions from theCode du Travail.There are 528 national,regional, difference by attempting to controlfor the GDP growth of the foreign anddepartmental collective agreements in France. After we examine country. To identifythe coefficient, one would then take into account the Lower Rhine’s (dee´partement du Bas-Rhin, one of the two subregions in GDP growth of all France’s bordering countries. In our case, thetwo Alsace) 10 collective agreements, Upper Rhine’s (theother dee´partementt dee´partements of Alsace border Germany, and Moselle shares a borderr in Alsace) one, Alsace’s four regionwideagreements, Moselle’s six, and with Germany and Luxembourg.The French dee´partement du Nord bor- Lorraine’s one, it is interesting to note that only four sectors (retailing ders Belgium, and a few other dee´partements in France share a border with and repairs, metallurgy and metal transformation, construction, andhotels Italy, Switzerland,and Spain. Including all these border effects (and count- and restaurants) have collective agreements that do not explicitly mention inghalf the border effect when a dee´partement hasaborder with two the two supplementarypublic holidays. We argue that it has been easier countries), we compute a border#GDP growth effect, which can be seen for employers to substitute public holidays for RWT days in these four in table1,where border is a dichotomous variableequal to one if the sectors since workers in these sectors seem to be less aware of their rights. individual lives in a department bordering a country and zero otherwise.7 In other sectors, however, it may have been less easy to do so. Therefore, 7 we deemed the four aforementioned sectors, which experienced a milderr Border is a dummy variable equal to one for all dee´partements close to a border. DDee´partment 54 is close to Luxembourg; 57, 67, and 68 are close to Germany; 90, application of the 35-hour reform, as the “treatedgroup,” and all other 25, 39, 1, and 74 are close to Switzerland; 73, 74, 4, 5, and 6 are close to Italy; sectors were included as the “control group.” As in table 1, we present and 66, 9, 31, 65, and 64 are close to Spain. Data on GDP were collectedfrom the DDD results associated with these affected firms, or affected sectors, the OECD Web site. 35-Hour Workweek in France 509 510 Chemin/Wasmer

Column 7 includes the new border#GDP growth effect term. First, there regions (groupings of three to four departments) in which they live. Thus, is not a significant change in the coefficient of interest (hours worked), we drop the year 2003 in this section. and second,the GDP growth effect coefficient is positive (although in- Table 2 examines therelationshipbetween themilder reform in Alsace- significant).8 Moselle in 2000 and employment in the full sample. The dependent var- The last falsification test of theidentification strategy has been to apply iable is a dichotomous variable taking the value one if the individual is the same DD analysis to all regions in France. Indeed, owing to sample employed and zero in any other case (i.e., theindividual may be unem- size limitations in the labor force survey,wecould have found spurious ployed or inactive). results indicating that the number of workhours declared in Alsace- In column 1, the sample is restricted to occupations affectedbythe 35- Moselle increased relative to the rest of France in 2001–2. Replacing hour reform.10 Note that the sample cannot be restricted to firms with Alsace-Moselle with any other region should yield no significant results. more than 20 employees, or to sectors affectedbythereform, since we If this is the case, we could be more confident that we are effectivelyy do not know the firm size or activity sector of unemployed or inactive picking up an “exogenous” regional specificity of Alsace-Moselle. Indeed, individuals. The coefficient of (Alsace-Moselle)#(2001–2) is not signifi- we replicated column 6 of table1for the21regions in France and obtained cantly different from zero, indicating that themilder version of thereform 9 reassuring results. Out of the 21 regions, onlyAlsace and Lorraine had had no effect on employment. positive and significant coefficients. Overall,these findings lend support In column 2, the sample is restricted to occupations unaffectedbythe to Alsace’s specificity and the exogeneity of therelative increase in hours 35-hour reform. In column 3, the coefficient of interest is (Alsace- in triple differences. Moselle)#(2001–2)#(affected individuals), a DDD coefficient, where affected individualsisadichotomous variableequal to one if theindividual VI. Impact of the 35-Hour Reform on Other Outcomes has an occupation affected by the 35-hour reform and zero otherwise. In lightof the previous section, we can be fairly confident that the As shown in table2,the coefficient of interest is not significantly dif- application of working time reduction was different in Alsace-Moselle ferent from zero. This indicates that there is no difference in local em- than in the rest of France. We can also be confident that this difference ployment in Alsace-Mosellerelative to the rest of France as a resultof is exogenous anddue to the specificity oflabor laws. Considering that themilder version of the 35-hour reform. This result is in concordance thereform was 10% less effective in Alsace-Moselle, the next step is to with the findings of Estevaaõ and Sa (2006), who argued on the basis off establishhow various economic variables evolved in Alsace-Mosellerel- firms’ size that theemployment effect is difficult to estimate andfound ative to France in the period 2001–2. If it evolves positively, that is, if it to be generally insignificant. As small andlarge firms maybe differ- # we obtain a positive coefficient for the variable(Alsace-Moselle) entially affectedbymacroeconomic shocks, our strategy maybe consid- # (2001–2) (treatment group), this means that theRWThad anegative ered especiallyrobust in that our analysis is based on both regions and impact on thespecific variableunder investigation. A negative coefficient the occupations of individuals, regardless of the size of the firm in which implies a positive RWT effect on that variable, whereas insignificant co- they work. efficients imply that theeffects of thereform are nonexistent, or at least Columns 4 and 5 investigate the differential effect of the 35-hour reform not strong enough to be detected in the data. on various groups. In these columns, the sample is restricted, respectively, to high schoolgraduates and non–high schoolgraduates. Results are al- A. The Employment Effect ways insignificant.11 To establish theindividual employment effect, employment rates in Column 6 introduces, as in table 1, an interacted term between a border Alsace-Moselle are compared to those in the rest of France in 2001–2 dummy variable (taking thevalue one if theindividuallives in a depart- compared to 1996–98. Whilethe 2003 Enqueˆte Emploi provides infor- ment sharing a border with a country, zero otherwise) and theGDP mation concerning workers’ specific departments, a difficulty arises in growth of this particular country.When foreign business cycles are ac- that the data on unemployed, or inactive, individuals include only the counted for, no effect is found on employment.

8 We replicated the analysis with GDP per capita growth in place of GDP 10 We know the occupations of 73,875 unemployed individualsand 115,732 growth. The main coefficient on hours is not significantly affected. inactive individuals, making this estimation feasible. 9 As Corsica has no regional code standing in the Enqueˆte Emploi, 21 instead 11 A similar test was conductedfor individuals younger than 40 years old and of 22 regions were accounted for. individuals older than 40 years old, with insignificant results. 35-Hour Workweek in France 511 ) ) ) 4 ) l l ) 09 Whilecolumns 1–6 focus on theindividual employment effect, a similar 2 u 9 7 ( F 1038 0 05 7–8 .081 .092 .034 . . analysis maybe led at a more aggregatedlevel.Wethus estimate the DDD: ( ) number of individuals employed in a certain department to test whether Ϫ s

themilder version of the 35-hour reform in Alsace-Moselle had an in- ) )( ) ected artment 24 . 8 p ff ( ed Individuals

ﬂuence on the total number ofjobs. This is especially interesting since DD a 05 ( y .081 .1038 . n ( lo

we mayfurther discriminate between jobs likely affected, or not, by the U Individual p endent Variable: s 35-hour reform. In column 7, the dependent variableisthe log of the p e ) 7 (Em in the De ) D 1 85 g number of individuals employed per department in occupations affected ) 6 1 o 7 ected 1 0 ( L .124 . DD bythe 35-hour reform, and in ﬁrms employing more than 20 employees, ( Ϫ Aff and in sectors affectedbythe 35-hour reform. No effect is found on the Individual number of jobstheoreticallyaffectedbythe 35-hour reform in Alsace- d )( ) 8. ) 2 7 ) s) ations

Moselle after the reform. However, this could be due to border effects l 6 p 0032 ( .007 .090 .00 . .00 DD ( ( ( ua y Ϫ Ϫ with Germany.Wethus look at other jobs not likely affectedbythe 35- Ϫ ccu Affecte d O hour reform. In column 8, the dependent variableisthe log of the number ) ivi d ed ) )( )( 7 of individualsemployed in occupations not affectedbythe 35-hour re- 1 ) ) 21 11 5 kill –2 0116 0 (

form, or in firms employing fewer than 20 employees, or in sectors not s .015 .014 .026 . . .0 1 DDD: n ment Dumm ( Ϫ y affectedbythe 35-hour reform. No significant effect is found on total U lo : ed or Inactive )( )( )( employment in Alsace-Moselleafter 2000. In column 9, the coefficient of p ) y 23 ed ) 4 lo

# # 0057 ( .021 .024 .018 .0086 . interest is (Alsace-Moselle) (2001–2) (affected individuals), a DDD co- .0003 .0062.00 .0579 p 1–2 kill DDD ing Inactive In S ( Ϫ Ϫ Ϫ Ϫ efficient, where affected individualsisadichotomous variableequal to d u )( )( )( 9 l ) l 3 l one if the log of the number of individualsemployed concerns individuals ) 3 –2 0032 00 0009 ( .013 .016 .015 . .0007 . . Fu 1 ( ( employed in occupations affectedbythe 35-hour reform, and in firms DDD: ( Ϫ Ϫ e, Inc employing more than 20 employees, and in sectors affected by the 35- l ed, 0 If Unem d y )( ) hour reform, zero otherwise. The DDD coefficient is insignificant, in- lo ) ations p Samp 2 p 0036 0008 ( .008 . . dicating that theeffect of thereform on total employment is insignificantly DD ll ( ( Ϫ Ϫ ccu

different from zero. Conley-Taber conﬁdence intervals were also com- Unaffecte O endent Variable: Individual Em puted and indicate no signiﬁcant impact of thereform on employment. (1 If Em p ) 8 2 De ) 2 ) ations 1 p ( .007 .003) (.012) (.016) (.022) (.015) (.003) (.049) (.021)** (.021)** .00 .003 oyment (Fu Yes Yes Yes Yes Yes Yes Yes Yes Yes B.The Unemployment Effect DD ( ( l ffected ( Ϫ Ϫ ccu A

Another outcome of interest is unemployment. Table 3 examines the O relationship between themilder 2000 reform in Alsace-Moselleand unemployment. The dependent variable is an unemployment dummy (one if unemployed, zero if employed). This subsection is thus different from orm on Emp f the previous one since the sample in Section VI.A included all individuals ) # ) (employed, unemployed,and inactive), whereas the sampleinthis sub- )

section includes only employed and unemployed individuals. ) ) 2001–2 1999– 2001–2 1999– ( ( ( ( In column 1, the sample is restricted to occupations affectedbythe35- 7 ( # # # # rowth ) ) ) ) g hour reform. Noeffect is found of themilder reform in Alsace-Moselle e 35-Hour Re h t

in 2001 and 2002. In column 2, the sample is restricted to occupations DP f (affected individuals G

unaffectedbythe 35-hour reform. In column 3, the coefﬁcient of interest # ) # r

# # e2 is (Alsace-Moselle) (2001–2) (occupations affected), a DDD coeffi- artment fixed effects (95) Yes Yes Yes Yes Yes Yes Yes Yes Yes 000) affected individuals p bl 2000 ( 2 e ontrol variables (14) Yes Yes Yes Yes Yes Yes No No No a Alsace-Moselle Alsace-Moselle Alsace-Moselle cient. Again, we find that the coefficient of interest is not significantly Alsace-Moselle ( Impact o T ( ( D Year fixed effects C OccupationOccupation fixed fixed effects effects (30) (30) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No No No ( Borde different from zero.

512 f rr s g nn n yy d d ce of an 95 t in n l h t , s y : o 9 ecte de ment ations ) ) 8 3 315 lo ff ) eve , d p y 5 p e affecte ess t ) nfi ( an lo ea at 7 00 evel hl enden ( , h # p .009 .003 .008 . artmen see n. 6 fo t DD t R ) i ( p 6 L ( p eco e occupatio , d h h Variable 5 t t sw De l nem De , an n w i U eform 2001–2 in firms em s dua ( r no i 5-hour reform, zero k v 3 # i s. 3, 4 nd ) l artment in occu d a s fall p ummies the in y in sectors not affected b d y r oselle er de o .Inco dto )( )( p 9 d e ) e ) ations d ed ees, 6 p ected u 0014 ( y y l .043 .002 .002 DD arentheses, clustered at the l ( ff ( lo lo p or inactive). We p ccu A p etween year d b O y le is restrict ear fixed effects are included. In cols. 1–6, ation affected b oye p y the 35-hour reform, l p artments. Zero alwa y ects are inc p ed ) ) ) )( 5. 3 ff ) 65 ummies 999 657 658 1 e ) , 2 29 d 5 kill unemp d 0 ( s .017 .017 .043 .024 .0139 .0 .000 f 1–2 ) DDD: n ed, xe ( d Ϫ Ϫ Ϫ fi y ment Dumm U fewer than 20 em y lo g oye l lo p , zero i in : p d y )( )( )( )( ations affected b ) ed 21 81 . lo ) 838 454 p , , a DDD coefficient, where affected individuals is a dichotomou p Emp 4 oye –2 ) l ( 00 f 1 kill .027 .026 .020 .025 DDD S ( emp 30 occupation as seven interaction of the number of individuals em f ,0I d d ll g ed in occu )( )( )( )( ) l y 557 126 l ) , artment fixed effects and seven in firms em 11 . oye lo u 3 p l ed and Unem –2 0 ( p .017 .013 .009 .017 .0075 .00 F 1 y ( ( DDD: ,aswe or ( Ϫ d lo e p d ummies) an ual to one if the individual has an occu ummy (one i n sectors affected by the 35-hour reform. In col. 8, the dependent variable is the log affected individuals u i d ( q l d 395 441 Unemp , d # f ) an ) )( )( oma l 57 . ) ations ected (1 I 2 ip p ff ( oyment d DD l .005 .008 a .00 le of Em ree more than the baccalaureate). In col. 5, the sam ( 2001–2 ( the 35-hour reform. In col. 3, the coefficient of interest is (Alsace-M ( n g p ccu endent variable is the lo y U # p ) O ummy are inc 396 568 endent Variable: Individual Unem , seven d the 35-hour reform, p d s y l hest de g De ed concerns individuals em ua ,an y d ld ) )( ) lo ivi o p ) ations d s. 1–6 is an emp h 1 ment (Sam l p ected ( in DD .002 .007 .003 .0014 .0007 .0003 .0009 y ( ( ( Alsace-Moselle d ( ccu Aff ouse lo 999 113 , h ations unaffected b p O p einco e ecte the 35-hour reform. In all columns, 95 de h ff bl t -Taber confidence intervals to correct for the small number of treated de y rowth. In col. 7, the de f y ea g ations not affected b h t p d DP d ent varia G d xe ects No No Yes Yes Yes No No No Yes # ) fi fixed ff e ) der epen s) ed in occu in firms employing more than 20 employees, l r d d inal effects at the mean in cols. 1–6 and OLS results in cols. 7–9. Robust standard errors are in y d e g # ua lo ) ) xe n h d le is restricted to occu p a epartments an p n sectors affected b ummies, sex, size o , of the number of individuals em i # )fi ivi d ) ) d le is restricted to skilled individuals (hi s adds bo g ts. T d l d l p in ) .0009 .0061 ) ua an d ort in the text the Conle d d resu . p mn 6 ve age etween d 1999–2000 2001–2 2001–2 1999–2000 u ivi ees, l fi b ( ( ( ( ecte d y ecte ff # # # # lo Co in ff es ( ) ) ) ) p . affected individuals (a bl ( d reporte Inactive Individuals # # eate ll ummies robit results with mar r n g ecte d varia P ual to one if the lo ations a ations affected au nificant at 1% ff l q l or a — nificant at 5%. g a p p ( atio nificant at 10%. g lf g p ects No No Yes Yes Yes No No No N e3 act of the 35-Hour Reform on Unem # l ote. r ff artment. We also re p e effects No No Yes Yes Yes No No No Ye (occu (occu ccu bservations 454 ** Si *** Si *Si p N epartment e bacca ore than 20 em ab f 189,607 unemployed or inactive individuals; this is why a DDD is possible. In col. 1, the sample is restricted to occupations affected by the 35-hour 4 contro ariable e h he exact list). In col. 2, the sam Alsace-Moselle Alsace-Moselle Alsace-Moselle nteraction ndividuals dummy. The coefficients of interest are highlighted in bold. nterva m 1 i i the 35-hour reform. In col. 9, the coefficient of interest is t affected by the 35-hourof reform the number of individuals em v individuals), a DDD coefficient,otherwise. where In col. affected 4, individuals the is sam a dichotomous variable e de i o t O O Yea D ( ( ( Im Excludin T (Alsace-Moselle

513 514 . s a d ll nn nn nn a .I ect r ) ) ons ) eate. i oye 6 9 o ff r l ) ) ) 7 e ist ) ) ations at l lf 28 au 5 5 s d p p l artment 8 o o ( ( 0 va .04 p xe r DDD DDD 1.69 .214 .108 ( ( fi ccu ccu te unemp Ϫ d in O O e exact e bacca lofde h an h t dummies betwee d zero otherwise. I nce n e or t upation a f c h oye l ) ) (occupations affected), s artment fixed effects and ess t )( )( p # 30 oc ) ) 589 1.694 132 . ) en.6 4 4 hl e d 0 0 ( ( t .08 to emp i ectors ector 1.04 DDD DDD )( 7 d S S ( ( ( sw 421 65 l , 2001–2 a orm (s ( .104 .005 f ( a # Ϫ e s falls in the confid the 35-hour reform, g ummies) an y a d y our re 61. ) ) e is restricte Wa * ees ees h l ge ) )( 0 y y 3 266 . y ) ) oma o 20 20 arentheses, clustered at the leve 0 0 l 3 3 lo Wa .02 . ( ( p e 35- pl p ϩ ϩ 1.11 2. ip DDD DDD ( Ϫ y h 685 433 d ( ( e samp , m m Ϫ h E E yt ). T of Hourl db seven d ation affected b d g p le is restricted to individu ecte ) ) oye artments. Zero alwa A. Hourl l p ff s ,an p artment level. In all columns, 95 de ld 156 122 p ee ees , 2 B. Lo o * emp y y 0 )( ) ) ) h f o 2 20 25 2 2 lo ( ( 0 5356 pl p .83 .02 . . ϩ ϩ ( 1 ouse m Ϫ h Ϫ Em E , zero i DDD Tobit DDD Tobit e d ( ( h t 581 415 , f oye to occupations a l d hted in bold. ment rate at the de g y unemp s s hli lo f g ) ) p ee ee * y y 0 )( ) ) ) o er restricte 2 20 257 196 1 1 lo 133 542 h ( ( 0 , p pl .02 .0 . ϩ ϩ ( DDD DDD 1.15 2 ( ( urt ( Ϫ f ummies, sex, size o Ϫ Em Em d ual to one if the individual has an occu q ummy (one i eis l d ve age fi e samp oyment h es ( l 421 109 s s ree more than the baccalaureate). In col. 5, the sam , bl g Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No .1,t l endent variable is the unem varia p er Outcomes l hest de h g ees/sector ees/sector . The coefficients of interest are hi s. In co l y y y o o ua d pl pl s. 1–6 is an unemp l ivi d . 1, 14 contro l y) 20 em 20 em orm on Ot d einco f ) ) -Taber confidence intervals to correct for the small number of treated de ϩ ϩ bl y ( ( .Inco inal effects at the mean in cols. 1–6 and OLS results in col. 7. Robust standard errors are in d g # # e ) ) rowth. In col. 7, the de d g ations affected is a dichotomous variable e u es inactive in l p d ations affected dumm ent varia u p DP l d G 2001–2 2001–2 ( ( ) h ations affecte # ) ects No No Yes Yes Yes No No epen p ations affected ations affected # # 14 7 d ff ) ) ( ( p p ,itexc der e 35-Hour Re e e e e ects are inc r h rowt h ll ll h ff es g d t e (occu bl le is restricted to skilled individuals (hi ations affected dumm f xe d p p ts. T # fi l DP t robit results with mar xe ort in the text the Conle P adds bo fi G p varia s. As suc l resu — e4 l # (occu ation fixed effects (30) Yes Yes Yes Yes Yes Yes N d ua sace-Mose sace-Mose p bl l l d affected/occu affected/occu # mn 6 artmen artment fixed effects (95) Yes Yes Yes Yes Yes Yes Ye a ote. der ummy) r u A A p p r ivi l ( ( T Impact o d fixed effects No No Yes Yes Yes No N N e d o ear dummies and the occu re included. In cols. 3–5, 95 interaction dummies between departments and the occupations affected dummy are included, as well as seven interaction col. 4, the sam Co seven year DDD coefficient, where occu a y We also re reporte in col. 2, the sample is restricted to occupations unaffected by the 35-hour reform. In col. 3, the coefficient of interest is (Alsace-Moselle) D Observations 433 Year fixed effects Contro Occu Yea B De

515 516 518 Chemin/Wasmer ; . e l yy s d h l t r er co ? e

f Columns 4 and 5 restrict the sample, respectively, to high school grad- p *** 9 p in a ) tervals ) 12 t p ummies 5 i 75 ( 2186 23 , uates and non–high school graduates. Results are always insigniﬁcant. d . size o ob 1.18 5. and divide Month , T ( Nationa s are shown Read

( Column 6 controls for the potential impact offoreign business cycles. ion t Ϫ t k News sex e The analysis maybeundertaken at a more aggregatedlevel. Unem- s, e n in cols. 1–5. Onl . ployment rates maybecalculated at the department level. However, the w resented ? p ummi y DDD analysis performed in columns 7, 8, and 9of table 2 may not be d a )( es ) -Taber conﬁdence in 4 D 759 6 0194 12 y ( , im

.06 undertaken in this section because the firm’s size and the sector of activity . . T er Ϫ p ve age of an unemployed individual are by definition not known. To controlfor Watch TV rise) are sho fi ummy, seven interac p

hours worked last we border effects, we thus perform a simple DD analysis with total unem- es ( dd y bl

es ployment rates, controlling for the GDP growth of neighboring countries. er ? m p )(

varia Robust standard errors clustered at the department level are presented. ) e treate l 2102 16 3 h 759 6 anel B. OLS results are .88 . . are included. In col. 2, Tobit resul t ( , ( p 1 Conley-Taber conﬁdence intervals were also computed and indicate no y e divided b d Outco Month g Ϫ Books r

ein signiﬁcant impact of thereform on unemployment. ort in the text the Conle wa g p y wa Othe y

. C.Other Outcomes ects, 14 contro ? s C ff e epartments an 0 ***

d Table4presents additional results based on variables such as wages and ) 7 d ) of hourl 2 759 6 xe ( 42 13 , g .09 . .

fi leisure activities. Although some of the coefficients do not reach signif- ( . Ϫ er Month anel A is monthl e) etween Exhibition p p icance, all significant coefficients provide confirmatory evidence for the g b artment. We also re p t year wa

h identiﬁcation strategy: there were fewer leisure activities andlower hourly ations and the treated dumm y p wages in Alsace-Mosellethan in the rest of France over the period 2001–2. e ? ummies d

ects, eig In particular, we ﬁnd that over the period 2001–2, individualsinAlsace- ff ations affected, sectors affected, and size of the enter e p *** Moselle had a lower propensity to bewilling to work more; went to ) ) d et the hourl 1 g 693 6 ( xe , endent variable is the lo .03 .1820 exhibitions less frequently; readfewer books compared to the rest of ﬁ ( p Ϫ s (occu

p France, although not signiﬁcantly;andﬁnally readfewer newspapers. 4.3 to to Work More y Would You Lik rou However, theydid not watchless television: this is indicative of therelative g ects, 95 interaction epartment elasticities of various types ofleisure with respect to available time. ff d endent variable in all columns of e p d er hour. The de e95 p xe

d VII. What We May Conclude fi u d) arentheses, clustered at the level of de l p Our paper had three aims. The first was to verify, from a purely de- ecte the three control ff g scriptive standpoint, that earlier findings by law scholars (e.g., Grisey- ˆtes permanentes sur les conditions de vie, Indicateurs sociaux d’octobre—Fichier historique 1996–2003 ee , and 30 interaction dummies between occu u umns inc l y artments. The de q Martinez 2005) would be confirmedbythe data. These works are legal p n co E ll ations a t analyses of the process of working time reduction in Alsace-Moselleand p ut a er hour and 83 francs

b how the national Aubry laws interfered with the locallaws of German p (occu

ummies), 30 occupation origin. These worksindicate that 2001–2 was an ambiguous period con- d # hours worked last week (and divided b own, ) h

y cerning theapplication of theAubrylaws, an ambiguityfavorableto e). DDD results usin g oma l employers. In fact, in Section V, we didﬁnd that the number of weekly wa ip at 16 francs y d 2001–2 g ( hours worked in Alsace-Moselle increased relative to the rest of France # interest is s ) e divided b

e by 0.35 hour on average, which represents 16 hours (2 days) per year. g f seven ll d wa

cant at 1%. The second aim was to verify whether the 35-hour reform had a sig- ﬁ y OLS results. Robust standard errors are in et the hourl ,an ear dummies and the treated dumm ni g cient o

y nificant impact on employment growth,asclaimedby its proponents. — g ld nificant at 10%. ffi o g h Our claim here is thatamilder apppplication of the 35-hour reform in Si ote. Monthl sace-Mose * Significant at** 5%. Si 4.3 to l * * a * N e coe 2 . Panel C looks at leisure in the data se ouse y ) A h h between there is bottom codin 2 to correct for theb small number of treatedt de ( ObservationsR 6 12 A similar test was conductedfor individuals younger than 40 years old and individuals older than 40 years old, with insignificant results.

517 35-Hour Workweek in France 519

Alsace-Moselle evidenced no impact on relative employment in that re- Appendix gion. We cannot conclude with certainty that the aggregate impact of the 35-hour reform was close to zero. However, our results are certainly consistent with this interpretation. How do our estimates compare to previous estimates of theimpact of Table A1 Descriptive Statistics the 35-hour reduction? In earlier works, the most optimistic estimates about theeffect were that approximately 500,000 jobs were created, Alsace-Moselle Rest of France whereas more conservative estimates were closer to 100,000–200,000 jobs. Mean SD N Mean SD N These estimates consistently fell within the rangeof our data, primarily Average number ofhours worked per because of the large standard errors. Despite the lack of precision of the week (all workers) 37.09 10.23 29,607 37.54 11.14 530,560 coefficients in tables 2 and 3(theemployment and unemployment effects, Average number of hours worked per week (only full-time workers) 39.93 7.83 24,793 40.53 9.08 439,499 respectively), we may want to say something about the gross numbers Number of hours worked last week 36.67 13.69 24,262 37.43 14.20 426,565 impliedbythese estimates. Indeed, we can obtain gross numbers in mul- Restricted sample:a tiplying the marginal effect coefficients (Alsace-Moselle#2001–2) by the Average number of hours worked per week (only full-time workers) 39.32 9.41 159 40.97 10.12 4,104 total number of employees in France andbya factor of 10 to get the full Number of hours worked last week 27.43 15.62 128 35.48 13.72 3,101 effect of the working time reduction (since the difference in implemen- Triple differences on hours:b Proportion of workers in big firms tation is by 10% of the total effect). The mean effect of table 2 is 155,000 (more than 20 employees) .86 .34 24,879 .85 .36 441,600 jobs created. However, this range is extremely sizable, going at least from Proportion of workers in affected Ϫ1million to ϩ1 million jobs (or about 5% of total employment). More- sectors .22 .41 24,879 .19 .39 441,600 Proportion of workers in affected over, thesigns of theeffect varyfrom one specification to theother. The occupations .84 .37 24,879 .80 .40 441,600 conclusion is that previous estimates of theemployment effect are not Proportion of workers in affected group (big firms and affected sectors entirely inconsistent with our results, but rather that we cannot find any and affected occupations) .15 .35 24,879 .12 .32 441,600 significant effect of the 35-hour reform using our empirical strategy. Control variables: Age: Thethird aim was methodological:wehave shown that interesting 15–24 years .11 .32 24,879 .10 .30 441,600 identification strategies based on local specificities in France were possible. 25–39 years .36 .48 24,879 .32 .47 441,600 Prior to our study,the belief was that most legal changes apply to the 40–49 years .05.22 24,879 .07.25 441,600 50–59 years .29 .45 24,879 .30 .46 441,600 entire nation. In reality, France is a rather interesting aggregation of re- 60ϩ years .17 .38 24,879 .20 .40 441,600 gionaldisparities. The example used in the present paper sheds lighton Sex (0 p female, 1 p male) .64 .48 24,879 .61 .49 441,600 Household size 2.98 1.21 24,879 2.99 1.22 441,600 one prominent exampleof regionaldisparities, and researchers maybe Highest degree completed: well served to explore other suchgeographic disparities in future research. Postsecondary education .00 .01 24,879 .00 .01 441,600 High school ϩ 2years .21 .41 24,879 .23 .42 441,600 High school .05 .22 24,879 .07 .26 441,600 Technical degree .37 .48 24,879 .31 .46 441,600 Secondary school .14 .35 24,879 .14 .35 441,600 No degree .12 .33 24,879 .13 .33 441,600 Labormarket outcomes: Employed (1 if employed, 0 otherwise) .47 .50 95,958 .45 .50 1,287,962 Unemployed (1 p unemployed, 0 p employed) .09 .28 49,639 .11 .31 652,174 Hourly wage 55.64 29.76 18,426 54.79 36.82 301,612 Log of hourly wage 3.93 .41 18,426 3.90 .42 301,612 a The sample is restricted to the two weeks with public holidays only in Alsace-Moselle in 2003 (the only year in whichdata were collected throughout the year, as opposed to Marchfor the previous rounds). The two weeks are those that include Good Friday (April 18, so April 14–20) and Saint Stephen’s Dayy (December 26, so December 22–27). b The sample is restricted to full-time workers (466,479 observations).

520 , , . s s s s a l y r 6 * ** * ) ) ) ) ) 5 ) s s va s), ) ) ects r l 5 6 6 ff 5571 09 2568 36 6 ( ( te e .26 .60 .22 .24 .30 . .09 . . . ua ( ( e DDD DDD d ricted to d Ϫ in sector t ll ed secto s ivi t g xe ees dumm d fi y in lo ly, in col. 3, 95 l d p a s is the number of t year n ˆ tels et restaurants). s s 3 1 o ecte s workin k * , a DDD coefficient h l 0em )( )( 0 5 ) ) ff g ) ) oYe 2 ected sace-Mose (a 5 5 55 33 ϩ ff l ( ( .22 .24 . .09 . .30 N a ector ector e # ) Ϫ n S S -Taber confidence in er Week er Wee ects, ei y U Unaffected p p ff ations and the affec e p artments and the affected sector d 2001–2 p ( xe # fi orm in A ) s s f 0 4 *( e ) )( )( Worked Worked ll ) ) o taux; construction; ho 3 7. affected individuals ( 4 4 e ected 288 3 y y ( ( .24 .25 . .553 .4 .47 N ( ector ector ff ffected # ) Ϫ S S ear dummies and th A A y le is restricted to individua epartment p d sace-Mose l 2001–2 ( ort in the text the Conle * # p ) )( ) ) )( )( 04 )( ) ) e 35-Hour Re 376 7 7. 3 3 0 36 8 h ( ( .0423 .2155 .52 .22 .12 .08 .24 .2 . .1637 .3092 .4605 . .27 umns, 95 l t ( ( ( DDD DDD Ϫ Ϫ f co ll interest is (A f ees. In col. 4, the sam y ees ees cient o )( )( )( 99 y y lo ) ) oYes artment. We also re Sectors, o ffi 20 20 p 2 2 lo lo 21 39 p sectors. In a ( ( .21 .11 .29 .0930 . N p p , and 30 interaction dummies between occu endent Variable: Hours Usuall endent Variable: Hours Usuall ! ! ( d y d Ϫ p p m m e coe E E h De De ecte ecte ff ff .6,t l A ´parations; metallurgie et transformation des me s e d are added. In col. 6, 95 interaction dummies between de 0 ees ee ing in a ) )( )( 4 k y y 0 y ) ) o 4. 0 7. tail, re 20 2 1 1 lo lo 4 8 e ( ( are included, seven interaction dummies between .23 .24 .35 .3795 .3 . .0412 .0487 .0425 .2434 .0338 .0341 N Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes p p ϩ ϩ ( ( ( y Ϫ . s wor l ld Em Em ua o d b er sectors. In co ees dumm h y ivi in d in a firm with more than 20 em lo ot d ees dumm p g ll y te ) y Firm Size, an h lo b p ig s are in ees. In col. 3, the coefficient of interest is (Alsace-Moselle 20 em ) arentheses, clustered at the level of de hl l y p ϩ ig d 5. ing in a ) ua lo h k d 20 em p .3 ϩ ivi e d ) fixed p ) fixe Impact ear dummies and the affected sectors dumm y s wor y in l l y d ua d interest are ecte ivi f ff ations, and the d affected individuals p ( erentia ea h ff # affected individuals ) ) to in ( artments and th d cients o p affected individuals # ( ) ) ffi umn, t # l ) ) ) d e coe ) . h is co ) 2001–2 2003 1999–2000 2003 2001–2 1999–2000 h 14 ( ( ( ( ( ( 7 in firms with fewer than 20 em ( .T ( e is restricte d l # # # # # # g e ) ) ) ) ) ) -test coefficient of interest d t (affected individuals dumm (affected individuals dumm u l e # Continue # t ( e samp cient. In t n OLS results. Robust standard errors are in h ffi nificant at 1% cation Strategy: Di — nificant at 5%. g A2 fi (affected(affected individuals individuals dummy) dummy) fixed fixed effects effects No No No No Yes Yes No No No No Yes Yes atio ation fixed effects (30) Yes Yes Yes Yes Yes Yes g , seven interaction dummies between y p p .5,t ects No No Yes No No Ye eA2 l # artmen artment fixed effects (95) Yes Yes Yes Yes Yes Yes Significant at 10%. ote. ff *Si ** Si p p bl e effects enti bservations 387,794 70,759 458,553 86,283 372,270 458,553 ccu * * * N e e ontrol variables 2 a -value of th ummy are inc Alsace-Moselle Alsace-Moselle Alsace-Moselle Alsace-Moselle Alsace-Moselle Alsace-Moselle 14 control variablesinteraction (five dummies age between dummies, de 30 sex, interaction size dummies of betweendumm the occu household, andd seven diploma dummies), and 30 occupation fixed effects are included. Addition DDD coe ( individuals workin In this column, theaffected affected by individuals the are deductionIn individuals of co workin the two extra public holidays (commerce de de R to correct for thehours small usually number worked of per treated week. departments. In Contrary to col. table 1, 1, the zero sample falls is in the restricted confidence to interval. individuals The working dependent in variable in firms all with colum more than 20 employees. In col. 2, the sample is re Occu D ( O pp Year Year D Year fixed effects C O ( ( ( ( T Id Table

521 35-Hour Workweek in France 523 524 Chemin/Wasmer

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