unemploymentIf everyone worked one less day (another holiday), industry would need one more employee for every 240 employees who take the day off. Surely the results would depend on many factors including: Would industry hire the necessary people to make of the difference? Would demand for goods increase or decrease as a result of the holiday?
Is it possible to estimate the net effect on employment?
This is pretty much the textbook example of the lump of labor fallacy.
As far as identifying the specific effects of such a policy, it is quite difficult as the government rarely introduces new holidays. I would say, if you wanted to tackle this problem, your best bet would be to do a diff-in-diff study using Arizona and MLK day, but I wouldn't hold out for statistically significant results.
It’s doubtful a national holiday would raise employment with all other things being equal (no gains in productivity, capital, population, etc.)
Why? Because a person must produce something before they can consume something. Thus, production always precedes consumption. With less production (e.g. a national holiday) people will not be able to consume as much resulting in a drop in demand for goods.
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