One_Lump,_or_Two - Page 1 of 2 One lump or...

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One lump or two? Oct 23rd 1997 From The Economist print edition Governments cannot reduce unemployment by limiting the hours people work ALL work and no play makes Jack a dull boy, and it may leave Jill unemployed—or so many European politicians and trade unions seem to believe. The governments of France and Italy have lately proposed cutting their legal working week to 35 hours as a way to trim unemployment. To a lot of people this seems to make excellent sense. Why should so many workers complain about being overworked, when one in nine Europeans is idle? Better, surely, to share out the work more evenly: the overworked can spend a bit more time at the gym, and firms can hire extra workers. It is depressing that supposedly responsible governments continue to pretend to be unaware of the old “lump of labour” fallacy: the illusion that the output of an economy and hence the total amount of work available are fixed. In fact the demand for labour depends upon productivity and wage costs. Fewer hours will create more jobs only if weekly pay is also cut—which workers tend
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This note was uploaded on 02/27/2011 for the course ECONOMICS 201 taught by Professor P during the Spring '11 term at Columbia College.

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One_Lump,_or_Two - Page 1 of 2 One lump or...

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