Unemployment rate and working‐hour constraints : Empirical evidence from the Swiss labour force

In this paper, the nature of working‐hour constraints in the Swiss labour force using a sample of 14,523 observations is analysed. Three theoretical justifications of the existence of hours constraints are tested: the specific‐capital model, the agency model and the efficiency wage model. The first two models make opposite predictions regarding the trade‐off between working‐hour constraints and job tenure. The third model makes a prediction regarding the potential effect of the unemployment rate on the extent of working‐time constraints. Results indicate, first, that neither model of lifetime contracting (specific‐capital and agency) explains the observed extent of working‐hour constraints. Second, it is found that the unemployment rate confronting the worker in his or her labour market constitutes an obvious incentive to work more hours than he or she wants.