Does a Mandatory Reduction of Standard Working Hours Improve Employees' Health Status?

• Published date: 01 January 2017
• Author: Rafael Sánchez
• DOI: http://doi.org/10.1111/irel.12163
• Date: 01 January 2017

Does a Mandatory Reduction of Standard

Working Hours Improve Employees’Health

Status?

*

RAFAEL S

ANCHEZ

Most of the empirical evidence regarding the impact of reductions of standard

working hours analyzes its effects on employment outcomes, family life bal-

ance, and social networks, but there is no empirical evidence of its effects on

health outcomes. This study uses panel data for France and Portugal and

exploits the exogenous variation of working hours coming from labor regulation

and estimates its impact on health outcomes (from 39 to 35 hours a week and

from 44 to 40 hours a week, respectively). Results suggest that the mandatory

reduction of standard working hours decreased the working hours of treated

individuals (and not the hours of individuals in the control group). Results also

suggest that the fact of being treated generated a negative (positive) effect on

young males’(females’) health in France. No effects on health outcomes were

found for Portugal.

Introduction

It is important to understand how reductions in working hours affect work-

ers’health, as several institutions have suggested this kind of policy. In par-

ticular, throughout the twentieth century, the International Labour

Organization (ILO) strongly supported the reduction of working hours specif-

ically because of its potential benefits to workers’health (International

Labour Organization 1990). Similarly, in 1993 the European Union imple-

mented the European Time Directive, which explicitly recommended that

*The author’saffiliation is Adolfo Ib

a~

nez University, Business School, Santiago, Chile. E-mail: rafael.

sanchez@uai.cl. The author is grateful to Wiji Arulampalam, Mark Stewart, Sascha Becker, and Sarah

Brown for their valuable comments. He would like to acknowledge seminars participants at Warwick

University, Adolfo Iba~

nez University, and the health seminar participants in Santiago, Chile, as well as the

useful comments from the editor and a referee of this journal. This study has been conducted using the

European Community Household Panel (ECHP). The ECHP data is used with the permission of Eurostat,

which bears no responsibility for the analysis or interpretations presented here.

JEL: I18, J08, J18, J22.

INDUSTRIAL RELATIONS, Vol. 56, No. 1 (January 2017). ©2016 Regents of the University of California

Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

Road, Oxford, OX4 2DQ, UK.

3

member countries reduce their weekly working hours to potentially improve

their citizens’health.

The rationale behind these recommendations is that longer working hours

may be detrimental to workers’health because greater time spent working dis-

rupts workers’internal and external recovery (especially the latter).

1

In reference to internal recovery, Spurgeon, Harrington, and Cooper (1997)

suggested that longer working hours negatively affect workers’health both

directly and indirectly. Longer hours are directly harmful to workers’health

because they cause stress as workers try to maintain performance levels while

facing increasing fatigue, and they are indirectly harmful because they increase

the length of time that a worker is exposed to other sources of workplace

stress. Taris et al. (2006) suggested that internal recovery will depend mainly

on the characteristics of each job and that longer working hours will affect

external recovery mainly by shortening the periods when individuals rest.

2

Working longer hours will generate a spiral, because those workers who do

not fully recover from a workday will have to invest additional effort to per-

form adequately during the following day, resulting in an increased intensity

of negative load reactions that affect even more strongly the recovery process.

These effects accumulate over time, affecting health outcomes (Sluiter et al.

2003).

However, apart from these negative effects that support international organi-

zations’claims, longer working hours may also have some helpful effects, as

they are positively associated with current and future earnings and with faster

rates of career progression (Francesconi 2001); because health improves with

earnings (Deaton 2003), higher earnings should increase individuals’health

status. Furthermore, the literature on promotions supports these ideas. In par-

ticular, Lazear and Rosen (1981) and Rosen (1986) view promotion as a tour-

nament in which promotions are allocated to those workers who rank higher

than all other workers in a group in a given period. The probability of getting

promoted provides an incentive to exert effort, and, as this effort or propensity

to work hard is not directly observable, firms will use indicators, such as hours

of work or overtime hours, to select workers for promotion. Thus, a mandatory

reduction in working hours for treated individuals (relative to controls) will

1

Internal recovery is the worker’s capacity to recover during working hours, and external recovery is

the worker’s capacity to recover outside office hours (Taris et al. 2006).

2

This points to another open debate in organizational psychology: it is not clear whether what causes

negative health effects is the length or the organization of the working hours. The only consensus here is

that something should be done, because countries like the United Kingdom face costs of around £1.24 bil-

lion a year in stress-related illnesses (Beswick and White 2003).

4/ RAFAEL S

ANCHEZ

limit the scope for competition via hours for this group of workers.

3

This neg-

ative effect on the probability of promotions (which affects the future income

pattern) may have a negative impact on health, as individuals may become

concerned and stressed about their future career and income. This effect is in

line with the implications derived from the effort–reward imbalance (ERI)

model (Siegrist 1996). In general, the ERI model acknowledges the link

between high-cost/low-gain conditions, which are considered particularly

stressful. One example of this is a high-effort situation associated with no pro-

spects for promotion.

Therefore, reducing working hours may produce a trade-off between these

two effects, thus having a theoretically ambiguous effect. For this reason,

empirical evidence is needed.

To identify how reducing working hours affects health is complicated, as

the number of working hours might be endogenous due to the so-called

healthy worker effect (Frijters, Johnson, and Meng 2009).

4

This is the main

caveat of previous studies that analyzed the link between health and working

hours (see Beswick and White [2003] and van der Hulst [2003] for surveys).

To overcome this problem we use a change in regulation as an exogenous

reduction in the maximum amount of weekly working hours to analyze its

effect on health outcomes. Moreover, we analyze two different countries, each

with a different threshold of working hours: France, which reduced its standard

weekly working hours from 39 to 35 in 1998, and Portugal, which reduced its

hours from 44 to 40 in 1996.

It is important to acknowledge that we are studying only the short-term

effects of a mandatory reduction in the standard working hours on health out-

comes. We do not analyze the long-term effects, as we face some data con-

straints. For the analysis we use the eight waves of the European Community

Household Panel (ECHP) for France and Portugal, which, despite the coun-

tries’institutional differences, enhances comparability as the countries use a

common questionnaire. The empirical framework we used takes a difference-

3

Firms have two alternatives when a law that reduces standard working hours is imposed (if the

employee is not fired). On the one hand, firms can reduce the treated workers’total number of hours. On

the other hand, firms can maintain the total number of hours and pay overtime. In the former case, the prob-

ability of promotion is negatively affected by the reasons explained above, and this may negatively affect

health. For the latter case, and with a heterogeneous pool of workers, firms will be more willing to pay over-

time for the most productive workers, putting extra pressure on workers to show that they belong to this

group, and in this way affecting their health status. Additionally, if workers foresee that they are likely to

lose their jobs because of an increase in the marginal cost of employment relative to the marginal costs of

hours, they will experience additional negative pressure on their health status.

4

The healthy worker effect states that individuals with better health will tend to work longer hours than

those with worse health.

Reduction of Working Hours and Health /5