Increases in standard hours have been a contentious policy issue in Germany. Whilst this might directly lead to a substitution of workers by hours, there may also be a positive employment effect due to reduced costs. Moreover, the response of firms differs between firms which offer overtime and...

A reduction in the legal workweek may induce a degree of downward wage flexibility, while an employment subsidy to firms accommodates downward wage rigidity. It may be possible, therefore, to increase employment with a policy that combines a reduction in the workweek with an employment subsidy....

In Germany, overtime work is a well-established instrument for varying working hours of employees and is of great importance for establishments as a measure of internal flexibility. However, not all employees are affected to the same degree by a variation of the work effort through overtime...