Abstract

Do workweek reductions create jobs and raise productivity, as intended by policymakers? In 2000, France cut the standard workweek from 39 to 35 hours at constant monthly pay and paired the re-duction with employer payroll tax cuts. We combine matched employer–employee, balance-sheet, and survey data to study the effects on workers, firms, and local labor markets. We first exploit the staggered implementation by firm size to identify the impact of the reform package. We then use differential exposure to the hours cut and tax cut to separate their effects. The reform package left employment unchanged. This zero masks large offsetting effects: absent the tax cuts, the shorter workweek would have reduced employment by 4%. The effects are skill-biased, raising employment among managers and professionals while reducing it among other employees. Finally, shorter hours raised total factor productivity by 2%, limiting the output decline to 1% despite a 6% fall in total hours. Surveys point to work intensification and organizational changes as potential drivers of productivity gains.