The Effects of the Legal Minimum Working Time on Workers, Firms and the Labor Market

This paper examines the effects of working time regulations on the allocation of workers and hours. I exploit a unique reform introducing a minimum workweek of 24 hours in France in 2014, affecting 15% of jobs. Drawing on administrative data and an event study design, I find a firm-level reduction in total hours worked, showing imperfect substitutability between workers and hours. The effects differ by gender: women working part-time were replaced by men working longer hours. Importantly, workers also reallocate between firms. To quantify the aggregate impact accounting for these effects, I build and estimate a search and matching model with firm and worker heterogeneity. Overall, the minimum workweek increased total hours worked by 1% due to positive general equilibrium effects, but concentrated hours among fewer workers as unemployment rose by 2%. Gender inequality increased because of the within-firm effects and less reallocation of women between firms.