LEARNING OBJECTIVES
After you have read this section, you should be able to answer the following questions:
What are the facts about hours worked across countries?
What are the explanations for these differences in hours worked?
The total number of hours worked in an economy depends on both the number of people who are employed and the number of hours worked by each employed person. So far, we have said little or nothing about this second issue. But another significant difference between Europe and the United States is that people work less in Europe than in the United States. If you hear such a statement, perhaps on the radio, you might have some questions about this comparison.
- Does this difference stem from differences in productivity? That is, is it the case that workers in Europe are less productive than workers in the United States, so it is less worthwhile for them to work as much?
- How is the difference measured? For example, suppose we simply divided the number of hours worked in an economy by the total population and found that this number was higher in the United States than in Europe. There are many possible reasons why this might be true. It could be because labor force participation is higher in the United States. Or it could be because the unemployment rate is lower in the United States. Or it could be because the average employed person in Europe works fewer hours than the average employed person in the United States.
Such questions simply mean that we had better be sure that we get our facts straight. We do this in the next part of this chapter. After that, we again turn to some theory to understand what is going on. [***Discussions of this topic by academics have been prompted by the work of Nobel Prize– winning economist Edward C. Prescott. The following article provides an overview and analysis of the key issues: Edward S. Prescott, “Why Do Americans Work So Much More Than Europeans?”Federal Reserve Bank of Minneapolis Quarterly Review 28, no. 1 (July): 2–13, accessed August 22, 2010, http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=905.***]
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