DP20785 Labor-Market Effects of Introducing the 8-Hour Workday
In 1919, the Danish craft and industrial sector permanently adopted the 8-hour workday, representing the largest reduction in working hours in the country’s history. We collected quarterly data on hourly wages and employment from 1914 to 1931 across occupation groups, covering Copenhagen and the aggregate of the provinces in Denmark. By exploiting variation in percent work-time reductions across occupation groups and regions, we examine the income and employment effects of the reform. Our findings reveal only a compensating rise in hourly wages in Copenhagen, though this increase was insufficient to offset the decline in weekly earnings due to fewer working hours. Furthermore, we observe that the reduction in working hours was mitigated by new hires, particularly of unskilled workers. Overall, our results suggest that reductions in work hours were not (in any region) fully compensated by gains in hourly wages but tend to support the "work-sharing" hypothesis.
