Education and the Decline in Average Hours Worked: Evidence from Nordic Labor Markets

Average actual hours worked (AAHW) have declined across many advanced economies, affecting aggregate labor input and potential output. This paper examines the evolution of AAHW in Nordic countries between 2011 and 2022, with a focus on educational attainment and complementary ++gender, employment status, and citizenship. Using microdata from the European Union Labour Force Survey and a Shapley decomposition, the analysis shows that the decline in AAHW is primarily driven by reductions in hours among workers with lower and medium levels of educational attainment, used here as a proxy for skill levels. By contrast, highly educated workers work longer hours and their increasing share partly offsets the decline. Our decompositions show that this education-based result remains robust when worker groups are further split by age, gender and full-time/part-time status, and that most of the citizenship-related variation is concentrated among citizens, with non-citizen contributions generally smaller and often offsetting. Finland represents a temporary pandemic and post-pandemic exception, although the overall contribution of tertiary-educated workers remains positive. Supplementary evidence comparing desired and usual hours shows larger positive gaps among less-educated workers, while tertiary-educated workers in several countries appear closer to, or at times above, their preferred hours. These patterns are consistent with constraints on realized hours, stronger worker demand for hours, or both, but do not identify the underlying mechanism.