How Do Hours Worked Vary with Income? Cross-Country Evidence and Implications

Abstract

This paper builds a new internationally comparable database of hours worked to measure how hours vary with income across and within countries. We document that average hours worked per adult are substantially higher in low-income countries than in high-income countries. The pattern of decreasing hours with aggregate income holds for both men and women, for adults of all ages and education levels, and along both the extensive and intensive margin. Within countries, hours worked per worker are also decreasing in the individual wage for most countries, though in the richest countries, hours worked are flat or increasing in the wage. One implication of our findings is that aggregate productivity and welfare differences across countries are larger than currently thought. (JEL E23, E24, J22, J31, O11, O15)

Migration Costs and Observational Returns to Migration in the Developing World

“…However, one may wonder whether the value of leisure is very high at the margin for rural workers near subsistence consumption levels in the poor countries and households in our sample. Empirically, the substantially higher average work hours in poor countries (Bick, Fuchs-Schündeln, and Lagakos, 2018) suggest that those households may not put much weight on leisure relative to consumption at the margin. If so, the level of consumption in the city may better capture the outcome of interest for a poor rural individual considering migrating to the city rather than consumption per hour worked.…”

Labor Market Dynamics and Development

“…The job-finding rates ( Figure C1b) are quite low, though the rationale for this result is difficult to come by. Feng et al (2018) and Bick et al (2018) highlight how including such countries may change the overall shape of cross-sectional labor market patterns. Given the extra cost in collecting (even short) panel data, however, labor force surveys are unfortunately unavailable in such countries.…”

“…The search and matching literature offers a number of theories with candidate frictions, but we lack systematic empirical evidence to evaluate which is the most promising. While recent work has developed estimates of important crosssectional objects such as hours worked or the unemployment rate, the main limitation is that little is known about labor market dynamics in poor countries (Bick et al, 2018;Feng et al, 2018).…”

“…We choose to focus only on urban areas for our benchmark results, although if anything our results appear to be stronger in rural areas. Additional data sources on the poorest countries, which are primarily rural, would be valuable, particularly given evidence that some labor market patterns diverge in these countries (Bick et al, 2018;Feng et al, 2018).…”

Evaluation of Employment and Labour Market Trends in European Countries in 2007-2016

“…Their conclusions are as follows: in the countries with low-income, the average number of worked hours is much higher than for high-income countries. Also, they stress that differences in prosperity are much greater than the GDP per capita indicates [2].…”