Hours Worked Across the World: Facts and Driving Forces Nicola - PowerPoint PPT Presentation

Hours Worked Across the World: Facts and Driving Forces Nicola Fuchs-Sch¨ undeln Goethe University Frankfurt Anglo-German Foundation Annual Lecture April 18, 2018

Hours Worked Across the World 1 Hours worked worldwide Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Hours Worked Across the World 1 Hours worked worldwide 2 Hours worked in Europe and the US - Decomposition of differences Europe vs. US * Components: Employment rate, weeks worked, weekly hours * Demographics: Age structure, education, etc. Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Hours Worked Across the World 1 Hours worked worldwide 2 Hours worked in Europe and the US - Decomposition of differences Europe vs. US * Components: Employment rate, weeks worked, weekly hours * Demographics: Age structure, education, etc. 3 Which groups show the largest differences? - Theory: Taxation as driving force Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

1. Hours Worked in Poor and Rich Countries Bick, Fuchs-Sch¨ undeln, and Lagakos (2018): “How Do Hours Worked Vary with Income? Cross-Country Evidence and Implications” American Economic Review , 108(1) Micro data as only source of information for poor countries: Challenge of representativeness and comparability Labor force survey collection for 80 countries Results from 49 “core” countries with best comparability Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Analyzed Countries Sample Core Non-Core N/A Approx. 40% of world population live in analyzed countries Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Average Hours Worked per Adult (Age 15+) 50 45 40 KHM 35 TZA VNM KEN Hours per Week PER LAO 30 ECU GHA MNG COL 25 TLS USA UGA PAK BWA RWA MWI CYP LVA CZE PRT CHE MUS TUR EST 20 ALB SVN ROM SVK NAM ZAF GRC DNK LTU AUT GBR FIN POL HUN DEU SWE IRL ESP NLD BGR FRA ITA 15 BEL IRQ 10 5 0 7 7.5 8 8.5 9 9.5 10 10.5 11 ln(GDP per Capita) Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Average Hours Worked per Adult (Age 15+) 50 45 40 KHM 35 TZA VNM KEN Hours per Week PER LAO 30 ECU GHA MNG COL 25 TLS USA UGA PAK BWA RWA MWI CYP LVA CZE PRT CHE MUS TUR EST 20 ALB SVN ROM SVK NAM ZAF GRC DNK LTU AUT GBR FIN POL HUN DEU SWE IRL ESP NLD BGR FRA ITA 15 BEL IRQ 10 5 0 7 7.5 8 8.5 9 9.5 10 10.5 11 ln(GDP per Capita) On average 29 hours in poor countries, 19 hours in rich countries Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Average Hours Worked per Adult & U.S. Time-Series 50 45 40 KHM 35 Hours per Week TZA VNM KEN PER LAO 30 ECU 1944 1900 GHA MNG COL 25 TLS USA UGA PAK BWA RWA 2005 MWI CYP 1933 CZE LVA PRT CHE 20 MUS TUR EST ALB SVN ROM SVK GRC NAM ZAF LTU DNK AUT GBR FIN POL HUN ESP DEU SWE IRL NLD BGR FRA 15 ITA BEL IRQ 10 5 0 7 7.5 8 8.5 9 9.5 10 10.5 11 ln(GDP per Capita) Core Countries U.S. Time-Series (1900-2005) Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Implications for Welfare and Labor Productivity Measurement of welfare differences: - Based on only consumption: Rich countries have 12 times higher welfare than poor countries - Based on consumption and hours worked: 19 times higher welfare Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Implications for Welfare and Labor Productivity Measurement of welfare differences: - Based on only consumption: Rich countries have 12 times higher welfare than poor countries - Based on consumption and hours worked: 19 times higher welfare Measurement of labor productivity differences: - GDP per worker 14 times higher in rich countries - GDP per hour worked 17 times higher in rich countries Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Relatively Homogeneous Picture Hours worked per adult are higher in poor than in rich countries - for both margins (employment rate and hours per worker) - for men and women - for all education groups - for all age groups - in all sectors (except agriculture) Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Hours Worked of Men and Women Men Women 50 50 45 45 KHM 40 40 PAK ECU PER KEN COL TZA 35 35 KHM VNM TLS LAO Hours per Week Hours per Week TUR VNM TZA 30 MNG 30 LAO GHA BWA MUS USA MWI IRQ CYP CHE KEN RWA UGA CZE GRC PER 25 LVA 25 PRT AUT GHA ZAF SVN ALB ROM EST SVK GBR NAM ESP DNK NLD MNG POL LTU DEU HUN IRL ITA ECU FIN SWE UGA 20 FRA 20 RWA USA BEL BWA EST BGR MWI COL LVA TLS PRT ALB ROM SVN CYP NAM LTU SVK CZE 15 15 FIN DNK BGR ZAF CHE HUN SWE GBR POL AUT GRC IRL MUS FRA DEU ESP NLD BEL 10 10 ITA TUR PAK 5 5 IRQ 0 0 7 7.5 8 8.5 9 9.5 10 10.5 11 7 7.5 8 8.5 9 9.5 10 10.5 11 ln(GDP per Capita) ln(GDP per Capita) Difference of 9 hours between poor and rich countries for both genders Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Hours Worked over the Life Cycle 40 30 Hours per Week 20 10 0 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 Age Low-Income Middle-Income High-Income Largest differences at retirement age Caveat: Cannot distinguish age and cohort effects Components Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

2. Europe vs. US Bick, Br¨ uggemann, and Fuchs-Sch¨ undeln (2017): “Hours Worked in Europe and the US: New Data, New Answers” Data: Representative household surveys in US and Europe (Current Population Survey, European Labor Force Survey) Statistical decomposition of differences between Europe and US into components and demographic structure Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Analyzed European Countries Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Average Hours Worked per Person (Aged 15-64) 1,250 1,000 750 500 250 0 US SE NO DK CH UK AT DE NL BE FR IE CZ PL HU PT ES GR IT US Western Europe Southern Europe Scandinavia Eastern Europe time series Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Statistical Decomposition: Results Average hours worked in Europe 14% lower than in US Fewer European Lower European weeks worked education levels 1/3 to 1/2 1/3 to 1/2 Residual Scandinavia & West. Europe: East. & Southern Europe: Lower employment rates, Lower weekly hours, but higher employment rates but higher weekly hours Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

43 41 GR CZ PL HU 39 Weekly Hours PT US 37 ES BE CH IT AT UK FR SE 35 IE DE DK 33 NO NL 31 50 55 60 65 70 75 80 Employment Rate (in %) Different Components of Average Hours Worked Weeks worked and employment rates 49 US 48 Weeks Worked 47 NL BE HU PL 46 PT UK IE CH GR NO 45 CZ ES SE IT AT DK FR 44 DE 43 50 55 60 65 70 75 80 Employment Rate (in %) Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Different Components of Average Hours Worked Weeks worked and employment rates Weekly hours and employment rates 49 43 US 48 41 GR CZ PL HU Weeks Worked 47 39 Weekly Hours PT US NL BE HU PL 46 PT 37 ES BE CH UK IE IT AT UK CH FR SE GR NO 45 35 CZ IE ES SE IT AT DE DK DK FR 44 33 NO DE NL 43 31 50 55 60 65 70 75 80 50 55 60 65 70 75 80 Employment Rate (in %) Employment Rate (in %) Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

3. Europe vs. US: Taxation and Labor Supply of Married Women Bick and Fuchs-Sch¨ undeln (2018): “Taxation and Labor Supply of Married Couples across Countries: A Macroeconomic Analysis” Review of Economic Studies , forthcoming Bick and Fuchs-Sch¨ undeln (2017): “Quantifying the Disincentive Effects of Joint Taxation on Married Women’s Labor Supply” American Economic Review Papers and Proceedings , 107(5) Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Average Hours Worked per Person (Aged 25-54) by Gender and Marital Status Men Women Married Single Married Single Mean 1761 1485 1028 1189 Married women work fewest, married men most hours Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Average Hours Worked per Person (Aged 25-54) by Gender and Marital Status Men Women Married Single Married Single Mean 1761 1485 1028 1189 Standard deviation 104 111 180 101 Married women work fewest, married men most hours Married women exhibit largest differences across countries Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Average Hours Worked per Person (Aged 25-54) by Gender and Marital Status Men Women Married Single Married Single Mean 1761 1485 1028 1189 Standard deviation 104 111 180 101 Correlation with Married Men 1.00 0.79 0.06 0.64 Married women work fewest, married men most hours Married women exhibit largest differences across countries Married women’s labor supply uncorrelated with married men’s Hours Worked Across the World Nicola Fuchs-Sch¨ undeln

Taxation: The Example of US, Germany, Sweden Hours worked per married person (25-54) relative to US Men Women Germany -14% -34% Sweden -16% -4% US: lower average tax rates Germany and Sweden: higher average tax rates Hours Worked Across the World Nicola Fuchs-Sch¨ undeln