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The Effects of Labor Market Conditions on Working Time: the US-EU Experience

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  • Michelacci, Claudio
  • Pijoan-Mas, Josep

Abstract

We consider a labor market search model where, by working longer hours, individuals acquire greater skills and thereby obtain better jobs. We show that job inequality, which leads to within-skill wage differences, gives incentives to work longer hours. By contrast, a higher probability of losing jobs, a longer duration of unemployment, and in general a less tight labor market discourage working time. We show that the different evolution of labor market conditions in the US and in Continental Europe over the last three decades can quantitatively explain the diverging evolution of the number of hours worked per employee across the two sides of the Atlantic. It can also explain why the fraction of prime age male workers working very long hours has increased substantially in the US, after reverting a trend of secular decline.

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  • Michelacci, Claudio & Pijoan-Mas, Josep, 2007. "The Effects of Labor Market Conditions on Working Time: the US-EU Experience," CEPR Discussion Papers 6314, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6314
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    2. Makovleva, Ekaterina (Маковлева, Екатерина), 2018. "Tools and Methods for Resistance to Unfair Execution of a Government Contract [Инстурменты И Методы Противодействия Недобросовестному Исполнению Государственного Контракта]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 62-81, June.
    3. Ferrari, Alessandro, 2023. "Losers amongst the Losers:," Research in Economics, Elsevier, vol. 77(1), pages 34-59.
    4. Ricardo Manuel Santos, 2014. "Dynamic Effects of Labor Supply: a mechanism explaining cross-sectional differences in hours," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 630-653, October.
    5. Ferrari, Alessandro, 2020. "Losers amongst the losers: the welfare effects of the Great Recession across cohorts," Working Paper Series 2509, European Central Bank.
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    7. Lonnie Golden, 2009. "A Brief History of Long Work Time and the Contemporary Sources of Overwork," Journal of Business Ethics, Springer, vol. 84(2), pages 217-227, January.
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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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