Introduction

As soon as it became clear that the current recession in Europe was likely to be severe and protracted, commentators and politicians became attracted to the possibility of redistributing work amongst people so as to reduce involuntary unemployment, i.e. work-sharing. This was not a new development. Similar concern had arisen in the thirties, leading to the dramatic and unsuccessful attempt by the Front Populaire to introduce a 40 hour week in France (see for instance Economie Européenne, 1980 or Fontaine, 1984, for a summary account of that earlier development, and Carré et al., 1972, for a survey of French experience). In recent years, a number of policy measures designed to promote work-sharing have been implemented in European countries, and several reports have attempted to assess their impact (Van Den Bergh and Wittelsburger, 1981; Hart, 1984; or Commissariat Général du Plan, 1985). The overall impression conveyed by these reports is one of limited effectiveness in reducing unemployment – at least if one goes by hard evidence – while it is sometimes even asserted that these measures are misdirected and bound to be selfdefeating (see Layard et al., 1984). Yet, with youth unemployment rates reaching 25% or more in several European countries, and no major improvement in sight, it is understandable that the motivation to bring about some degree of work-sharing should persist.

The present paper is not meant to replicate the existing collective reports, but rather to appraise recent European experience and the prospects for work-sharing in the light of the modern microeconomic analysis of labour contracts.