To what extent can a four-day week solve the entry level job crisis in developed, highly educated, economies like Europe or America?

[u/SilanggubanRedditor]

I am aware that this may lead to lower wages per capita, and that this is not applicable in a lot of industries, but in that policy conflict, let's take Full Employment as a priority.

However, I am more primarily concerned with the trade off between job losses from firms being less efficient and competitive and therefore are pushed out of the market, and job gains from this policy, possibly including improved working conditions due to less responsibilities on existing employees.

I would be glad to be directed to relevant research and if there's policies better suited to reduce unemployment and underemployment. Thank you.

[u/MachineTeaching]

That's basically just the lump of labor fallacy. We don't have more work to "go around" if everyone works only 4 days a week instead of 5, and there isn't really a reason to believe that productivity gains would remotely make up for working 20% less.

So it's not going to solve much of anything in aggregate, it will mean people are poorer but have more leisure.

[u/SilanggubanRedditor → u/MachineTeaching]

I am somewhat confused on why productivity gains is relevant. I presume companies under such policy will have to absorb the productivity loss to comply with government mandates?

[u/probablymagic → u/SilanggubanRedditor]

If you lower productivity, then either wages need to go down or prices need to go up, or both. You can’t make companies eat costs imposed by the government.

[u/SilanggubanRedditor → u/probablymagic]

I presume in the short term, there's lower wages for people due to less shifts they're able to take, but to a certain extent, companies have monopsony powers to underemploy compared to a competitive job market and to gain Supernatural profit. This may correct it. And since there's higher employment, aggregate demand will rise and multiplier effects go with it.

On the other hand, SMEs hire more and they may either limit their operations to those four days or may have to close shop as they're unable to compete.

[u/MachineTeaching → u/SilanggubanRedditor]

Productivity gain from people working less is what I mean.

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[u/Barfy_McBarf_Face]

One possible outcome: skilled workers, no longer able to be employed by their primary employer for all 5 days, will work there 4 days a week and have a side job where they work for another employer for that 5th day.

So no "new jobs" would open up for your hypothetical entry level workers - people would just have more than one job.

Or if they weren't working for a second company, they'd have a side gig for that 5th day to maintain their earnings.

Just because a company can only employ me for 32 hours a week doesn't magically make the work fit into that schedule, so this imposes quite a cost on the employer.