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This paper is joint work with Alexander Hijzen and Stéphane Carcillo
This paper provides a first assessment of the causal impact of an ongoing reform in Korea meant to combat its long working-hour culture. The reform consists of lowering the statutory limit on total weekly working hours from 68 to 52 between 2018 and 2021. We apply a difference-in-difference approach in which we take advantage of the stepwise implementation of the reform by firm size and use individual-level data. We present three main findings. First, the introduction of the 52-hour limit reduced the incidence of working more than 52 hours among employees working overtime by about a fifth. Second, the introduction led to a reallocation of working hours, with more employees working overtime within legal limits (41-52 hours). Third, this reallocation more likely took place within firms to account for fewer overtime hours worked, rather than within households to compensate for fewer hours worked by the household head. Overall, our results show that a lower statutory limit can help to lessen a long working-hour culture, but is an insufficient measure by itself to eradicate it.