Is There Any Added Worker Effect from the Reduction in Standard Working Hours? The "Aubry's Law" in France as a Natural Experiment

Meherun Ahmed, University of Washington

Added Worker Effect (AWE) implies increased labor force participation of married women when their husbands become unemployed or face working hour restriction without any compensation. This incidence of AWE has been documented mostly in terms of unemployment spells faced by the husbands. This is the first attempt which empirically investigates the existence of AWE using mandatory reduction in standard working hours in France as a natural experiment. The results show that the exogenous reduction in standard work hours for husbands does not lead to any unemployment-to-employment transition among wives but that it increases the number of hours worked by wives who are already in the market and are not affected by the law themselves. It is also found that AWE in terms of hours worked is more prominent in low income families and for families with more members, as family size is positively correlated with the degree of credit constraint.