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Friday, July 07, 2006

Does Europe Have a Leisure Trap?

From Heleen Mees of Project Syndicate:

Europe’s Leisure Trap, by Heleen Mees , Project Syndicate: ...[Compared to Europeans,] Americans work more hours per week and have less vacation time, but they have more money to spend. Not only does a higher percentage of American adults work, but they also work more hours per week and more weeks per year. ...

According to the MIT economist Olivier Blanchard, Europeans simply enjoy leisure more than Americans do, even if it means that they have less money. ... But not everybody agrees with Blanchard. Some economists point out that high tax rates in Europe make work less rewarding – and thus leisure more attractive. Other economists see Europe’s powerful labor unions as an important determinant in European attitudes towards work...

Moreover, Blanchard fails to note that the preference for leisure is not gender-neutral. The transatlantic difference in hours worked can be explained in part by comparing the labor input of European women to the input of American women. While American women work 36 hours per week on average, Dutch women put in only 24 hours per week, while German women work 30 hours. French women with a job work on average 34 hours per week, but the percentage of women who work outside the home in France is almost 20% lower than in the US.

Are European females that much lazier than American females? The answer depends on whether one considers the time women in Europe spend on domestic work. The economists Ronald Schettkat and Richard Freeman have calculated that American women spend ten hours per week less on cooking, cleaning, and childcare than European women do. Instead of performing these household jobs themselves, Americans pay other people to do them. Americans eat more often in restaurants, make ample use of laundry, dry-cleaning, and shopping services, and hire nannies to take care of young infants. ...

In other words, American women work more hours and use the money they make to hire people to do the tasks that they can’t do because they’re working. By contrast, European women work less and have less money to spend on services. In their “free time,” European women are busy cleaning the house and looking after the children. On balance, therefore, European and American women work about the same amount of hours.

Meanwhile, more wealth is created in the US than in Europe. After all, women professionals do not have to choose between a career and children, but can enjoy both. By spending part of their extra income on household jobs and personal services, American women limit their workload while creating demand for service jobs that wouldn’t exist otherwise. To put it inelegantly, two birds are killed with one stone.

In Europe, no birds get killed at all. Highly educated European women who have children either stay at home or work part-time and get stuck in low-end jobs. They take care of the household and children themselves. Meanwhile, there are not enough service jobs in Europe to put everybody to work. The social benefits paid to the out-of-work increase the tax burden on labor income, which in turn discourages women from full-time work. The leisure trap thus keeps both the best educated and the least educated out of the workplace.

The argument is that out-of-work benefits keep highly educated women from working, and therefore they don't hire lower educated women to perform service work for them.

Let's look at some evidence. This 2003 paper is "Women in the Labour Force: How Well is Europe Doing?," by Christopher Pissarides, Pietro Garibaldi, Claudia Olivetti, Barbara Petrongolo and Etienne Wasmer. This paper looks at differences in employment between men and women and says that, across Europe:

[W]ith some important exceptions (e.g., in the provision of subsidised child care) there are no clearcut correlations between female employment rates and measurable features of the welfare state. ...

The gender employment gap is also far less for the more educated group. ... The gender employment gap widens substantially when one takes into account the presence of children. On average, ... the gender gap rises from 14.4 per cent for women without children, to more than 27 per cent for women with two or more children. ... A similar pattern holds, perhaps surprisingly, for the United States. The reason that women in these countries have high overall employment rates is that childless women work in large numbers, not because large numbers of women with children join the labour force. If attention is restricted to households with two or more children the United States and United Kingdom resemble the low-employment continental European countries. ...

That last sentence makes it hard to argue that social benefits explain the difference in women's employment between Europe and the U.S.

    Posted by on Friday, July 7, 2006 at 05:00 PM in Economics, Policy, Unemployment | Permalink  TrackBack (0)  Comments (86)


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