The OECD’s data on hours worked per year show that in the last twenty years, on average, people in nearly all countries have worked less hours per year, implying they enjoy a greater amount of leisure time. Despite this, the US has decreased at a slower pace than most other developed western countries. From 1993 – 2013 they dropped from 1,829 hours to 1,788. Meanwhile Germany has dropped from 1,547 to 1,388 and Switzerland from 1,686 to 1,585. We can see that not only did Germany and Switzerland start lower, but also their pace of descent is much higher. Another finding reported by the Economist is that within the US, the rich now work more hours than the poor. This opens up two important questions: first, is this a problem and second, is there any policy solution that can reduce the number of hours worked without negatively effecting welfare.
The first question comes down to whether or not people are happier because of their ability to work extra hours. We need to ask first why the rich work more hours. Economic theory provides a background on the labor-leisure trade off. It might suggest two opposing outcomes depending on a person’s utility function. If wealth effects are large, we can imagine that since it requires fewer hours to earn just as much money, they should reduce the number of hours and maintain the same lifestyle with more leisure time. Alternatively we could imagine that an increase in wage rate may make leisure a more expensive choice thus meaning workers stay later. These questions may altogether be irrelevant though. It is likely the case that this is partially coercive long hours where high paying jobs require this amount of hours and the only choice is to accept or reduce hours to zero. If this is the case, then we can certainly imagine a policy intervention to reduce the number of hours permissible. France has taken a step with their 35-hour workweek policy, but it’s likely damaging for some employers. Moreover some of the poor need to work more hours to support their families and this policy would be unfairly binding. Barring this, we leave open the question of whether there is any way to fight against these forced long hours without restricting the ability to work longer hours when the decision in unforced. It seems though that targeting these groups separately would be hard, and there would necessarily be high costs for businesses that have roles which lose efficiency when split into separate parts.
The first question comes down to whether or not people are happier because of their ability to work extra hours. We need to ask first why the rich work more hours. Economic theory provides a background on the labor-leisure trade off. It might suggest two opposing outcomes depending on a person’s utility function. If wealth effects are large, we can imagine that since it requires fewer hours to earn just as much money, they should reduce the number of hours and maintain the same lifestyle with more leisure time. Alternatively we could imagine that an increase in wage rate may make leisure a more expensive choice thus meaning workers stay later. These questions may altogether be irrelevant though. It is likely the case that this is partially coercive long hours where high paying jobs require this amount of hours and the only choice is to accept or reduce hours to zero. If this is the case, then we can certainly imagine a policy intervention to reduce the number of hours permissible. France has taken a step with their 35-hour workweek policy, but it’s likely damaging for some employers. Moreover some of the poor need to work more hours to support their families and this policy would be unfairly binding. Barring this, we leave open the question of whether there is any way to fight against these forced long hours without restricting the ability to work longer hours when the decision in unforced. It seems though that targeting these groups separately would be hard, and there would necessarily be high costs for businesses that have roles which lose efficiency when split into separate parts.
-Mac
Sources:
http://stats.oecd.org/index.aspx?DataSetCode=ANHRS#
http://www.economist.com/news/finance-and-economics/21600989-why-rich-now-have-less-leisure-poor-nice-work-if-you-can-get-out
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