As part of one of my first tasks at Cato, I started reading 2004 Nobelist Ed Prescott's Minneapolis Fed paper, “Why Do Americans Work so Much More than Europeans?” His answer: taxes.
This led me to wonder about direction of causation and the highly touted continental taste for a leisurely quality of life. My wild guess at the story is that Europeans like to work just as much as anyone else if it pays. Taxes become extremely progressive due to the influence of the european left and the demand they fueled for welfarist programs of “social justice.” Taxes went way up. With tax rates so high, hours of work became worth rather less than hours of leisure, so economically rational folks worked less. Working less became a norm, and was integrated into various conceptions of the “national character.” This, in turn, along with bad thinking by the unions, led to caps on working hours.
So, my hypothesis is: europeans don't really appreciate leisure more, they're just taxed too much. If their taxes went down (and hour caps removed), people would start working more. They would complain about terrible Americanization, but they'd still work more. Soon enough, the norms would change, more folks would work more, growth would increase, and they'd do better at funding all those “social justice” programs.
But I'm no economist, sociologist, or simple caveman lawyer. So what's wrong with this story, if anything?
Who Likes Leisure?
Will Wilkinson 