Does Part-time Work Affect Firms’ Employment Structure and Outcomes?
Shorter working hours reflect a fundamental tension in modern labor markets: They may increase the labor force participation of women and improve work-life balance, but may impose organizational costs on firms through coordination frictions and reduced scheduling flexibility. I examine a 2001 German reform that granted employees in firms with 16 or more employees the legal right to reduce working hours permanently. Using firm-level administrative data and a difference-in-discontinuities design around the 16-employee threshold, I find no evidence that the mandate alters firms’ employee structure. Moreover, it does not affect firms’ business volume or hiring behavior. These null effects can be explained by firms already accommodating part-time requests before the reform. Overall, the results indicate that the mandate did not generate detectable distortions in employment or firm performance.