The effects of work sharing on employment and overtime in Finnish manufacturing 1960–87: comparison of three alternative models

Abstract The purpose of this paper is to develop a model of the determination of hours and employment is developed and compared with the models of Brunello (1989) and Hart and Wilson(1988). The models are estimated by using annual and quarterly data from the Finnish manufacturing sector. According to the results the actual hours closely follow the standard hours. This implies that the interior solutions in hours determination suggested by compared models are not relevant. Instead, firms try to avoid overtime. As a consequence, work sharing through shorter hours will be effective.