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Published online by Cambridge University Press: 21 December 2017
Why hasn’t economic progress lowered work hours more? One of Keynes’s most famous essays is his “Economic Possibilities for Our Grandchildren.” Keynes predicts that within one hundred years — which would bring us to 2030 — most scarcity will have disappeared and most individuals will work no more than fifteen hours a week. My question is a simple one: Why wasn’t Keynes right? Why have working hours remained as long as they have? Why hasn’t progress taken a more leisurely and less material form than what we have observed? Investigating that issue will help us get at the question of just how much progress has occurred. Under one view, Western life has been caught in a kind of rat race, and a lot of the gains of progress are illusory. For instance there is the argument that higher incomes are largely consumed as part of a futile race to win relative status, and living standards aren’t nearly as high as they might appear. Under some alternative scenarios, people haven’t moved to Keynes’s scenario for some good reasons, such as enjoying work more than we might think, or other hypotheses, as I will outline. In that case the observed changes in real income are robust, and measured correctly, or progress may even be greater than income measurements would indicate. I hope that addressing Keynes’s paradox can help us better understand this longstanding debate on the nature of modern progress.
For useful comments I wish to thank Johnny Anomaly, Bryan Caplan, Robin Hanson, David Schmidtz, Alex Tabarrok, Bas van der Vossen, conference participants, and an anonymous referee.
1 For a starting point on British living standards in the 1930s, see Broadberry, Stephen and Burhop, Carsten, “Real Wages and Labor Productivity in Britain and Germany, 1871–1938: A Unified Approach to the International Comparison of Living Standards,” Journal of Economic History 70, no. 2 (2010): 400–427CrossRefGoogle Scholar.
2 On the distinction between labor force responses at a point in time, and across long swathes of time, see Alesina, Alberto, Glaeser, Edward, and Sacerdote, Bruce, “Work and Leisure in the United States and Europe: Why So Different?” NBER Macroeconomics Annual 20 (2005): 1–64CrossRefGoogle Scholar; I will return to this theme.
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6 See for instance Roser, Max, “Working Hours,” Published online at OurWorldInData.org, http://ourworldindata.org/data/economic-development-work-standard-of-living/working-hours/Google Scholar.
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8 McGrattan and Rogerson, “Changes in Hours Worked, 1950–2000,” 16. Note that I have not found a simple way to do a 2010 updated estimate with consistent methodology.
9 This is drawing on Bureau of Labor Statistics data and Ramey, Valerie A. and Francis, Neville, “A Century of Work and Leisure,” American Economic Journal: Macroeconomics 1, no. 3 (2009): 189–224Google Scholar. Slightly different numbers from different years, but with a similar overall trend, can be found in McGrattan and Rogerson, “Changes in Hours Worked, 1950–2000,” 16. It is worth noting that good estimates on how many hours of the workday employees actually work are hard to come by. Other scholars report an estimate of seven percent of the workday being spent not working. See Michael Burda, Katei R. Genadek, and Daniel S. Hamermesh, “Not Working at Work: Loafing, Unemployment and Labor Productivity,” National Bureau of Economic Research Working Paper No. 21923 (2016), 4. This is based on self-reports, however, and arguably the actual amount of shirking is higher. We also don’t know whether this shirking has gone up or down over time, which could affect our estimates of overall trend.
10 On relative female to male wages and labor supply response, see McGrattan and Rogerson, “Changes in Hours Worked, 1950–2000,” 15. For gender convergence by sector, see generally Goldin, Claudia, “A Grand Gender Convergence: Its Last Chapter,” American Economic Review 104, no. 4 (2014): 1091–1119CrossRefGoogle Scholar.
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13 For an affirmation of the relevance of the substitution effect to Keynes’s argument, see Freeman, Richard B., “Why Do We Work More than Keynes Expected?” in Pecchi, Lorenzo and Piga, Gustavo, editors, Revisiting Keynes: Economic Possibilities for our Grandchildren (Cambridge, MA: MIT Press, 2008), 135–42CrossRefGoogle Scholar.
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21 See Ngai and Pissarides, “Trends in Hours and Economic Growth,” on Europe versus America; and on the import of labor taxation, see Prescott, Edward C., “Why Do Americans Work So Much More Than Europeans?” Federal Reserve Bank of Minneapolis Quarterly Review 28, no. 1 (2004): 2–13Google Scholar. On Sweden and America, see Conny Olovsson, “Why Do Europeans Work So Little?” International Economic Review 50, no. 1 (2009): 39–61. If you are wondering, time spent with children has gone up by about two hours a week, for males and females each, when children are present; of course it can be debated how much of this is work and how much is leisure (Aguiar and Hurst, “American Time Allocation: 1965–2005,” 61).
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28 Wolf, “America’s Labour Market.”
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31 Prescott, “Why Do Americans Work So Much More Than Europeans?” 2.
32 Alesina, Glaeser, and Sacerdote, “Why So Different?” 29.
33 For two versions of this hypothesis, see Frank, Robert H. “Context is More Important Than Keynes Realized,” in Pecchi, Lorenzo and Piga, Gustavo, editors, Revisiting Keynes: Economic Possibilities for our Grandchildren (Cambridge, MA: MIT Press, 2008), 143–50CrossRefGoogle Scholar; and Chris Thron, “Lifestyle Tradeoffs and the Decline of Societal Well-Being: An Agent-based Model,” Physics and Society (2015), http://arxiv.org/abs/1508.03524.
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45 Pencavel, John, “The Labor Supply of Self-Employed Workers: The Choice of Working Hours in Worker Co-Ops,” Stanford Institute for Economic Policy Research Discussion Paper No. 13-036 (2014), 2CrossRefGoogle Scholar.
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47 For some evidence that women adjust better to part-time work and lower-skill work, see Gregory, Mary and Connolly, Sara, “The Price of Reconciliation: Part-Time Work, Families and Women’s Satisfaction,” The Economic Journal 118, no. 526 (2008): F1–F7CrossRefGoogle Scholar. On whether evidence shows a wage gap between part-time and full-time workers by gender, see Hirsch, Barry T., “Why Do Part-time Workers Earn Less? The Role of Worker and Job Skills,” Industrial and Labor Relations Review 58, no. 4 (2003): 525–51CrossRefGoogle Scholar.
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