Substitution between Working Hours and Employment: An Empirical Analysis for Switzerland

Due to high unemployment rates since the mid 70s, there is a controversial political debate in Europe on the effects of substituting employment for working hours. Does a shorter working week reduce unemployment rates? Whereas this question has been a point of discussion in many Western European countries since the mid 80s, it only became relevant in Switzerland when unemployment started to increase in the 90s. This study investigates the substitution question in a static and a dynamic framework, using available aggregate Swiss data. The results point to no sizable effect of reducing working hours.