Arnold Kling  

Hours Worked in Europe vs. the U.S.

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Alberto Alesina, Edward Glaeser, and Bruce Sacerdote write,

we show, in an accounting sense, that legally mandated holidays can explain 80 percent of the difference in weeks worked between the U.S. and Europe and 30 percent of the difference in total labor supply between the two regions. On net, we think that this data strongly suggests that labor regulation and unionization appear to be the dominant factors in explaining the differences between the U.S. and Europe. We suspect that the effect of generous pension systems which reduced participation rates amongst elderly for older workers is also strong

The authors raise the question of whether Europe's labor market regulations produce an efficient or an inefficient outcome.

Perhaps everybody, on both sides of the Atlantic would like to work less but it is difficult to coordinate on a fewer hour’s equilibrium in competitive market where all workers act individually. According to this view, all would like more vacation if their friends, spouses and relatives also had them, but no coordination device is readily available.

For Discussion. If other people in your life were working less, would that make it easier for you to work less?

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COMMENTS (14 to date)
Randy writes:

No. I work as much as I do because I am responsible for several other people who do not work at all. When that is no longer true, I will work less.

Mark Horn writes:

I *think* the answer is no. My friends working less would not impact my amount of work. My evidence for this is that my family already works less than many of my friends families. My wife stays at home instead of drawing an income. Many of my friends families both husband and wife work, drawing greater income than us. In other words, my friends desire to work doesn't influence our desire to work.

But it strikes me that there's a lot more that goes into it than just whether or not my friends are working more or less. My friends working more or less may have an influence, but it's not going to be the single thing that determines the answer. For example, there is one couple that we know, that I make more money than both of their salaries combined (i.e. they work more than we do - 80 hours vs 40 hours - for a reason other than social pressure to work more). And there's another set of friends who not only make less than me, but they prefer a much lower standard of living than the one that we have (i.e. they work less than we do for a reason other than social pressure).

I know that all of this is anecdotal, but I'm having a hard time believing that the social network is the main determinant of how much a person works.

luke writes:

Mark, I like your anecdotal reasoning. I much prefer it to economists manipulating data thru all forms of sound and un-sound analysis. especially because a conclusion is usually drawn first, then the data manipulation is performed in such a way to support the original conclusion.

and I have similar experiences. most of my friends work a good deal less than I do, but it doesn't really make me work less. income mostly determines how much I work. if I could earn similar or greater income working less, however, I would work less.

just another single piece of data. who's drawing the regression line analysis between Mark and I?

Rob writes:

Perhaps it is not so much that friends determine the hours we work, but rather it may be those people we consider competitors in our field, whether that be the person in the next cubicle or the person at the other company.

Also perhaps consider this example. For a business to business service company, it can be very costly when people take time off, unless that time happens to correspond to when the customer is also taking time off. In this sense, the more time a customer takes off, the more time the supplier can take off.

Randy writes:

On the other hand, it seems to me that the question is not quite right. The question should be; If everyone, or nearly everyone, were working less hours, would I work less?

I'm thinking of the beginnings of the 40 hour work week. If productivity increased to the point that I could make a decent living in 30 hours a week, and the rest of the society was doing exactly that, I might very well work less. But without those changes, its still gonna be 40+.

David Thomson writes:

It is simple common sense that human beings are inclined to work as little as possible---if they can get away with it. That this might be considered debatable is bewildering. And yet, Marxist doctrine believes that people will work harder once the capitalist chains of oppression have been removed. Such procrustean bed reasoning is why so many individuals had to be sacrificed to the zeitgeist.

Paul N writes:

I'd take more time off, but my wife only gets 2 weeks of vacation.

Marco writes:

Are you kidding? We are pressured to add "Global Resources". If I am not above average, I will be replaced. So next year, I need to be in the top quartile of my current cohort. And this is after years of trimming the bottom 15% annually.

Lancelot Finn writes:

I'd work less if people around me worked less, no question. And I definitely think we need more vacations, and that there's a coordination problem. You don't want to be the one employee who asks for vacations all the time-- people think you're a slacker.

There are lots of market failures within the workplace, because the assumption of perfect information radically fails. Generally I get very little supervision from above, as the prolificness of my comments on this blog may attest. That I am in my office by no means ensures that I'm working; while, on the other hand, I could easily do a good deal of my work outside the office, and often I might be more effective if I wasn't distracted by the internet. But in order to be SEEN to be working (whether or not I really am) I need to be LOCATED in the office.

I wonder if there's a link between more vacations in Europe and the lower birthrate. If you have to drag kids along, vacations become much more expensive, and you get an intra-family coordination problem; where your kids want to go may not be where you want to go. Maybe if you have kids, you get to where you might as well just keep working.

But I think the limited vacations in the US is mostly a coordination problem.

Tom West writes:

income mostly determines how much I work. if I could earn similar or greater income working less, however, I would work less.

Wrong. If you were earning more for the same work, you would work more. That's why high taxes are bad. At least that's what all the economists keep telling me, so it *must* be right :-).

jason kelly writes:

your initial premise is not necessarily true because there's another variable- leisure. you have to decide how much you value leisure versus money. in other words, getting paid the same for less work will induce you to work less if the extra leisure time is as at least as valuable to you as the extra money that could be earned by working the same hours. the reverse is also true. if the money is more valuable to you than the time, you will work at least the same hours. the bottom line: you would have to subjectively decide the money/time trade-off.

Alan Reynolds writes:

There are many dimensions to work effort including hours per week, weeks per year and years per lifetime. There are also questions of intensity -- the willingness to acquire new skills, relocate, travel, commute long distances, take on extra responsibilities, etc.

Alesina and associates have done innovative work in the political economics of what makes some economies do well (e.g., cutting spending and tax rates) and others fail (the opposite).

On this issue, Ed Prescott thinks the gap between U.S. and European work effort (narrowly defined) is all about the stick of taxes. Alesina & Co. think it's partly about the carrot of benefits -- retirement benefits and vacation time. I'd say both. But the cauality runs in two directions: Worker-citizens demand more leisure (through employers, unions or politics)when work is heavily taxed and leisure is tax-free or subsdized.

Mr. Econotarian writes:

This new paper seems to say: high marginal tax rates do discourage additional labor, as has been found before, but old-Europe labor regulations discourage additional labor even more!

I should note, my organization encourges people to take several weeks of vacation per year to keep people from burning out...

Austin writes:
my organization encourges people to take several weeks of vacation per year to keep people from burning out

That's what they want you to think. Really, companies want your vacation time to be used because, otherwise, it shows up as a debt on their accounting ledger.

To respond to Arnold's question, I would work less if everybody I worked with worked less hours. It really doesn't matter how much my friends work, just my coworkers.

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