Micro-economic evaluation of employee and firm strategies in the face of French experiments in working time reduction.

Summary The laws of June 13, 1998, known as the Aubry 1 law, and January 19, 2000, known as the Aubry 2 law, aim to reduce the working hours of full-time employees in order to promote job creation. They represent a far-reaching change that affects working hours, remuneration, the structure of the workforce and the organization of companies. This upheaval requires employees and their employers to modify their individual labor supply and demand strategies and involves them in a process of negotiation on working time, wages, employment and work organization. This thesis proposes an ex post microeconomic evaluation of these different changes, using theoretical models and econometric refutations. The first part of this thesis studies the individual strategies of employees and firms with respect to the 35-hour workweek. First, the impact of the reduction in working time on individual and family labor supply is analyzed (chapter 1), and then the determinants of job creation in firms that have switched to 35 hours are identified (chapter 2). The econometric analyses are based on the 2000 EMPLOYMENT and 2001 PASSAGES surveys. The main results show that on the labor supply side, employees whose spouses switch to 35 hours tend, all else being equal, to work fewer hours. On the labor demand side, more than 40% of the unadjusted difference in job creation between establishments that have switched to 35 hours and those that have not can be explained by disparities in the implementation of the RTT. The second part takes into account interactions between employees and employers and studies the impact of firms' organizational choices on the wage bargaining process. The decision to introduce a modulation/annualization system when implementing the reduction in working time and its impact on wages and working conditions are first analyzed (chapter 3). Then, the process of distribution of the quasi-rent between employees and employers associated with time flexibility and state aid is studied (chapter 4). According to the theoretical model and econometric refutations, the decision to introduce a modulation agreement is a function of (i) the volatility of demand, (ii) the trade-off of employees between wages and working conditions, (iii) the magnitude of the costs associated with this organizational change (fixed costs and negotiation with employees), and (iv) the organizational choices of competitors. The second proposed bargaining model explains the wage differences between insiders and outsiders at 35 hours by the process of distribution of the quasi-rent. Three factors determine the distribution of this quasi-rent: the disutility at work of employees in the flexible organization with and without net job creation, the relative bargaining power of new hires, and the marginal rate of substitution of workers between wages and working conditions. Finally, we show that the diffusion of the 35-hour workweek in the economy may indeed generate wage inequalities between full-time workers, but may be more satisfactory for all workers than a specialization of the economy in part-time work.