Full Report.pdf

A presidential mandate analyzed the impact of reducing maximum working hours on employment, wages, informality, and economic growth in Chile. International evidence shows that as income increases, working hours decrease. Chile's per capita income rose from $9,500 to $25,100 between 1990 and 2018, with weekly working hours decreasing from 49 to 41.3.

A micro econometric analysis of the 2001-2005 reduction of working hours from 48 to 45 found negative effects on employment and wages for those working more than 45 hours, with a 4.5 percentage point reduction in employment. Macroeconomic estimates suggest a reduction in working hours from 45 to 40 would result in a 5% decrease in total hours worked, a 0.5-5.5% decrease in real monthly wages, and a 0.5-1.5% decrease in annual GDP growth.

The study concludes that there are reasons to debate the policy's objective, design, and implementation, considering flexibility mechanisms to increase productivity and adjustment periods for companies. International experiences, such as those in Europe, have implemented working hour reductions with measures to minimize negative impacts, including transition periods, labor flexibility, and subsidies.