Impact of reduced working hours on urban economic dynamics

This study examines the unintended impacts of Korea’s legally enforced 52-hour workweek policy, uniformly implemented across the workforce to reduce excessive working hours, on local urban economic activities. Using de facto population data from Seoul Metropolitan Government (2017–2019) as a proxy for local economic behaviours, the analysis captures district-level, time-specific population flows. A clustering method is applied to classify districts based on functional characteristics, controlling for regional heterogeneity, while a fixed effects model isolates temporal trends and policy enforcement impacts. Results reveal approximately 3% increased outflow of economically active populations during evening hours in business-centred districts after policy implementation, particularly during periods of strict legal enforcement. While effectively reducing excessive working hours, findings indicate the policy unintentionally suppresses after-work economic activities. The study proposes that labour regulation frameworks incorporate flexible institutional designs, reflecting regional and industrial diversity, to alleviate these unintended economic consequences.