Korean government announce the 52 Hour Work Week (52 HWW) Law in 2018, which decreases the weekly maximum work hours from 68 to 52. Through the use of the difference-in-differences methodology, this study explores the impact of reduced working hours under the 52-hour workweek policy on cost stickiness. Utilizing Korean data from 2017 to 2020, I find that the 52 HWW increases cost stickiness. This is because, in the post-52 HWW period, firms are not as inclined to lay off employees, when their sales drop. This ultimately suggests that the 52 HWW causes management inefficiency.
