VOX: Americans do work more than Europeans, but please don’t think that Europeans are lazy - by Claudio Michelacci and Joseph Pijoan-Mas

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Americans do work more than Europeans, but please don’t think that Europeans are lazy - by Claudio Michelacci and Joseph Pijoan-Mas

Today Americans work around 30% more than Europeans. These differences are important and they explain almost all existing US-Europe differences in GDP per capita: GDP per capita is today 30% higher in the US than in France or Germany, while productivity, measured by GDP per hour worked, is roughly equal. This means that Americans are today richer than Europeans not because they are more productive but simply because they work more.

Is it really the case that Americans and Europeans have become intrinsically different? It may be. Yet, it is also true that aggregate labour market conditions have evolved quite differently in the US and Europe. During the last thirty years, wage inequality has increased substantially in the US and little in Europe, while the unemployment rate has risen in Europe but not in the US. Today, unemployment risk is smaller in the US than in Europe, obtaining better jobs is easier, there are greater chances to move up the career ladder, and to get employed in highly paid jobs. This implies quite different incentives during the working life of American and European workers.