Structural Transformation and the Deterioration of European Labor Market Outcomes

Abstract

This paper examines hours worked in continental Europe and the United States from 1956 to 2003. The empirical work establishes two results. First, hours worked in Europe decline by almost 45 percent compared to the United States over this period. Second, this decline is almost entirely accounted for by the fact that Europe develops a much smaller market service sector than the United States. A simple model of time allocation is used to understand these patterns. I find that relative increases in taxes and technological catch-up can account for most of the differences between the European and American time allocations over this period. (c) 2008 by The University of Chicago. All rights reserved..

Why Do Europeans Work So Little?*

“…This is discussed in a separate section at the end of the article. Other recent related studies analyzing the causes of labor supply are Rogerson (2007a) and Nickell (2004).…”

A Century of Human Capital and Hours

“…2 2 See for instance Laitner (2000), Kongsamut, Rebelo, and Xie (2001), and Gollin, Parente, and Rogerson (2002) for models of development; Rogerson (2008) for a model of the allocation of hours across sectors and countries; and Greenwood and Vandenbroucke (2008) for a model of the trend in leisure, among others. …”

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“…Finally, public service provisions (and thus taxes) are endogenous to analyze how policies respond to the changes induced by the Baumol process . To focus on the basic implications, the model is kept as simple as possible, and because no essential intertemporal margins are important, the model is static, see for example Buera and Kaboski (); Rogerson ().…”

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