NO WORK AND NO PLAY.(productivity)

In the nineteen-fifties and sixties, it was a commonplace that Americans would soon devote their lives to leisure, not work. The number of hours the average American worked had fallen by almost twenty-five per cent between 1900 and 1950, and pundits saw no reason for the trend to stop. By the end of the twentieth century, the futurist Herman Kahn prophesied in 1967, Americans would enjoy thirteen weeks of vacation and a four-day work week. The challenge, it seemed, would be figuring out what to do with all our free time.

Kahn was wrong. Today, Americans work about as many hours each year as they did in 1970, and, instead of thirteen weeks of vacation, the average American now gets four (and that includes holidays). But there is a place that has got considerably closer to the leisure society of the futurists' dreams--Western Europe. The French work twenty-eight per cent fewer hours per person than Americans, and the Germans put in twenty-five per cent fewer hours. Compared with Europeans, a higher percentage of American adults work, they work more hours per week, and they work more weeks per year.

One obvious result of this is that America is richer than Europe. In terms of productivity--that is, how much a worker produces in an hour--there's little difference between the U.S., France, and Germany. But since more people work in America, and since they work so many more hours, Americans create more wealth. In effect, Americans trade their productivity for more money, while Europeans trade it for more leisure. Folk wisdom suggests that the reason for this difference is cultural, which, depending on your perspective, means either that Europeans are ambitionless cafe-dwellers or that Americans are Puritan grinds with no taste for the finer things in life. But, while culture undoubtedly matters, not that long ago it was the Europeans who worked harder; in 1970, for instance, the French worked ten per cent more hours than Americans.

So what changed? The Nobel Prize-winning economist Edward C. Prescott has pointed to sharp increases in Europe's tax rates since 1970--higher taxes give workers less of an incentive to work extra hours. But taxes aren't high enough to explain Europeans' new taste for free time. A more plausible explanation was put forward recently by the economists Alberto Alesina, Edward Glaeser, and Bruce Sacerdote: European labor unions are far more powerful and European labor markets are far more tightly regulated than their American counterparts. In the seventies, Europe, like the U.S., was hit by high oil prices, high inflation, and slowing productivity. In response, labor unions fought for a reduced work week with no reduction in wages, and greater job protection. When it was hard to get wage increases, the unions pushed for more vacation time instead. Governments responded to ...