Tito BoeriBocconi University and Fondazione

Debenedetti

Portovenere 27 May 2006

Are Europeans Lazy? or

Americans Crazy?

2

Europeans have lower incomes per capita because they work

less

AUT FIN

GER

IRL

ITA

UKG

0

20

40

60

80

100

120

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

AUT FIN W GER IRL ITA UKG

USA=100

Income per capita=hourly labour productivity*work hours per head

Hourly Labour Productivity

Source: Groningen Growth & Development Centre, Total Economy Database

3

Why less hours per head?

Source: OECD

-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1

ITA

FRA

DEU

ESP

Hours per worker Unemployment Participation Demography

1. Less people at work (the Lisbon target)

Deviations from the US

2. Less hours per worker

4

Two explanations

1. Blanchard (2004) It is a matter of tastes, preferences. Europeans enjoy more leisure time than Americans, who are workholic and prefer consumption to leisure. Reassuring.

2. Prescott (2004) and Alesina et al. (2005) It is a matter of institutions. Taxes on labour, unions and product-labour market regulations discouraging labour supply.

5

Are US-Europe asymmetries related to individual decisions

about hours of work?

Source: Eurostat, European LFS ; Groningen Growth & Development Centre, Total Economy Database.

25

30

35

40

45

Average weekly hours worked peremployee

Average weekly hours worked per self-employed

USA ITALY EU 15

6

Or perhaps collective bargaining?

We want to feel the sunshine; we want to smell the flowers;Were sure that God has willed it, and we mean to have eight hours.Were summoning our forces from shipyard, shop and mill:Eight hours for work, eight hours for rest, eight hours for what we will.

Italy

010

2030

4050

1,500

2,000

Union density

Average actual annual hours worked per person in employment

7

What drives decisions about working time?

• Report # 1. Social norms coordinate decisions between genders within and between families in the allocation of time between market, non-market work and joint leisure activities.

• Report # 2. Institutions coordinate decisions between those working and those non-working. Work-sharing arrangements.

8

Two different approaches

• Paper 1 draws on Time-Use Data. Market and non-market activities. Close look at secondary activities and home production. Gender differences.

• Paper 2 draws on Policy Experiments

with Working Hours Reductions. So many different approaches and motivations. More or less centralised approaches.

9

Underlying question for the final panel.

Should the state regulate working time and how?

• Increasing heterogeneity of preferences on working time. Longer working life, increasingly complex life course. Conflicts of interests in the allocation of time.

• Are all interest being duly represented by private co-ordination mechanisms, e.g., unions and social norms? Are women, the unemployed and the children sufficiently represented?

• Are there other reasons to regulate working time?

10

First, getting the facts right. What is work and who is lazy?

Total Weekly Hours of Work

0

10

20

30

40

50

60

70

MARKET HOME TOTAL MARKET HOME TOTAL

men women

US EU

Source: Freeman and Schettkat, Economic policy, 2005