Effects of a reduction in hours of work on labor productivity and labor costs in South Korea: Evidence from a regression discontinuity design

This investigation aimed at estimating the effects of a reduction in hours worked on labor productivity and labor costs in South Korea. The treatment effect was measured by using the fuzzy RD design with micro data. The data were taken from the Workplace Panel Survey 2007 conducted by the Korea Labor Institute. The main finding of this study was that the fuzzy RD estimates of the effect of a reduction in fixed working hours on labor productivity were larger than the OLS estimates, and the increase in labor costs caused by a reduction in fixed working hours was not as large as previously thought. Thus, the results suggested that industrial competitiveness was not worsened as much as employers’ concern.