When Less is More: The Impact of the Regulation on Standard Workweek on Labor Productivity in South Korea

초록

This paper examines the impact of a workweek reduction policy on the labor productivity of manufacturing plants in Korea. Taking advantage of the stepwise introduction of the standard 40-hour workweek in Korea, we apply a difference-in-differences framework to individual-level cross-sectional and plant-level longitudinal data to examine the impact of the policy on working hours and output, respectively. We find that the policy reduced per-worker hours but increased per-worker output, which is robust to various specifications and sample restrictions. The observed increase in per-worker output is likely to be mediated through the increase in the total factor productivity and the amount of capital stock.