ABSTRACT
The economic analysis of the relationships between working time and employment is rendered less than meaningful if care is not taken at the outset to design a suitable labour market framework. To give a crude example: suppose that the labour market is described in such a way that no allowance is made for deviations from standard time working or for variations in the effective use of standard hours. While, as illustrated in Section 3.2, this sort of simplicity provides a useful analytical starting point, it is obviously inadequate as the basis for undertaking a realistic appraisal of the employment repercussions of, say, a reduction in the length of the standard workweek. Indeed, it would not be surprising if the resulting employment changes under these artificial conditions were viewed as being relatively attractive from a policy standpoint. A failure to recognize that the loss in standard hours might be partially accommodated by more effective use of existing hours or more overtime working would clearly entail potentially serious consequences for the accuracy of predicted outcomes concerning changes in employment and relative labour costs. Moreover, any initial errors in forecasting immediate labour market implications would be compounded in more broadly based analyses of related macro-economic considerations such as the implications for wage and price inflation, exchange rates and tax revenues.
