Hours Worked in Europe vs. the U.S.
By Arnold Kling
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?