Different but Equal
Discussion by Alberto Alesina
May 27 2006
Impressive effort
• Ambitious paper
• Attempt at going beyond simple
characterization of work, leisure,
unemployment etc
• Made me think a lot even though I
expected a somewhat different paper
more focused on market work hours in EU
versus US
Plan of the discussion
• The paper I would have written and the
questions I would have tried to answer;
• What have I learned form this paper about
the questions I would have asked
• Comments on what this paper
accomplishes instead
The paper I would have written
• Start with what we know about hours
worked in the market in US and Europe.
• Hours worked in the market decreased
dramatically in Europe while they stayed
pretty much the same in the US.
Europeans worked more than Americans
in the sixties much less today
• Review alternative theories and disputes
bout facts
What do we know: current debates
• Prescott: it is all taxes, substitution effects
in a standard utility function of market
labor versus leisure/home labor.
• Blanchard: it is mostly income effect:
European took their increased productivity
in the form of leisure. Utility functions are
different in the US and France (for Oliver
France is Europe)
• Alesina Glaeser Sacerdote: it is mostly
union imposed regulations, union
contracts, labor regulation pension laws
plus multiplier effects, social norms,
complementarily of leisure; taxes affect
only women participation
Dispute facts
• Aguiar and Hurst: Americans take much
more leisure than we think: more efficiency
in leisure taking and in the leisure industry
• Freeman and Shettack: Europeans simply
work more at home rather than in the
market, they do not take more leisure than
Americans. ( Parisians work at home in
August right?)
The paper I would have written
• Discuss the disputed facts
• Assess how much of the different in work
hours are explained by the three theories
(taxes, income effects, unions, multipliers
social norms)
What have I learned from this
paper about that
• Freeman and Shatatck are wrong. It is true
that Europeans work a bit more at home
than Americans but they also take much
more leisure. I fully agree with that.
• Aguiar and Hurst: the authors do basically
nothing about that paper. Very surprising
because they have a rather different story
but they do not bother reconciling results
and approaches. This has to be done
Theories
• They do not consider Blanchard’s theory
because they do not like to assume
different utility functions. But why? Utility
functions (i.e. culture) could be different.
• The fact that Europeans worked more than
Americans in the sixties is not enough
dispense of Blanchard’s view, as they
claim it is.
• Income effect
• Results that Europeans work at home
more than Americans at odd with a 100
per cent of Blanchard story, but I would
have liked to see more testing of that.
Blanchard can be right at least for 50 per
cent of the US EU difference
• More later on differences in utility functions
• Prescott: there is not much in this paper
that allows me to sees how much taxes
mattered. Probably they did a bit but the
authors do not seem that infested in
looking into that
• Alesina Glaeser and Sacerdote: their
emphasis on complementarities, multiple
equilibria, social norms is consistent with
the spirit of this paper; I would have liked
to see a better link with it in particular the
role of unions and labor regulations and
pension laws and more empirical testing
Additional element
• Adoption of labor saving technologies in
continental Europe in response to various
labor regulation, constraints on wage
inequality etc.
Bottom line
• I have not learned enough about my
questions, but I guess the authors of this
paper were interested in something else
so in a sense I cannot blame them
Their paper
• Much emphasis on what people do when
not at work.
• Perhaps too much emphasis.
• Why do I think that?
Data problems
• Conceptual: virtually every activity I can think of
at home is partly leisure partly home production:
coking, child care, reading a book vaguely
related to your work, even sex.
• For different people how much a certain activity
is leisure and how much is work vary
tremendously. If you like cooking you do lots of it
and you look like your are working. So this is not
random leads to underestimation of leisure
• Measurement: do we really trust answer to
time sheets?
• Forgetfulness.
• How is the residual activity to add to 24
hours is computed?
• Black economy: do people hide their time
worked in the black?
• Men thinking that they help their wife a lot,
overestimation of housework of men.
• Do we really care that much about whether
people enjoy their time cooking or reading or
watching TV or having sex?
• Up to a point yes but there is too much of that in
this paper, asking too much to the data. We will
never be able to disentangle down to the minute
how much leisure or home production people
take. I think the paper gives to much of a false
impression of knowing more than we can know
A few themes of the paper
• The importance of home production.
• Men and woman working the same
amount
• Social norms complementarities etc.
• Working on week ends (and some anti
Americanisms in the paper)
• Editorial comments
The importance of home production
• The paper is right in emphasizing this aspect
and there is a lot of nice modeling about this.
• Hoverer: not enough emphasis on productivity.
• If an engineer works in the market 10 hour a
week less because of taxes regulations etc and
paints his garage door and a painter goes
unemployed there is a huge loss of product icy
for society
• Work by Lindbeck and others on the effect of
welfare state in Sweden, engineers painting
garage doors not to pay taxes on painters’
salaries.
• Lower market working hours are associated with
higher productivity.
• Extraordinary statement in the paper that needs
to be vastly toned down: we should not worry
about unemployment in Europe because those
who work do not work very much any way.
On the other hand…
• If in country A (call it Sweden) Ms X cares
for the children of Ms Y for a pay and the
other way around and in country B (call it
Italy) the two women stay at home to care
for children, GDP is higher in country A.
• This is an important point: perhaps we are
we overestimating the GDP of Sweden
relative to that of Italy. It would be nice to
know by how much
Men and women working the same
amount
• Interesting fact but not a extraordinary as
they make it. They almost claim that we
economists should reconsider everything
we know about because of this fact.
• First of all: is it a fact?
• Not sure. I think it is culturally determined
and men think they work much more at
home than they actually do.
• With a larger sample of countries we
would find out that this fact is true in rich
non Latin countries only.
• This suggests, incidentally, that different
preferences/ culture may be important
explaining work attitude (go back to
Blanchard)
• I do not find at all surprising that single man and
single women work the same amount.
• They are subject to the same labor regulations,
they live alone and need similar amount of times
to cook etc.
• Single men like to take leisure with single
women.
• Social norms are surely important but this fact
alone is oversold as a proof that they are.
Social Norms Complementarities
etc
• I like this part of the paper for instance the
two equilibrium model, the social norms for
leisure, complementarities etc.
• Paper should do more in explaining why
Americans and European ended up in two
different equilibria.
Anti-Americanism
• The author have a model in which the European
equilibrium is pareto superior to the American
one. I am sure I can write a different model (in
fact Marios Angeletos and I have one) in which
the two equilibria cannot be Pareto ranked.
• I am sure that if I sit down in a day in which I am
particularly pro American I could write a model
in which the American equilibrium Pareto
dominate
• They should way tone down their claim on
Pareto comparisons.
Week ends
• Why is working on week end bad?
• It shows flexibility and increase social
utility.
• When stores are closed on Sundays and
you can do your hereins are you better
off?
• I think that there is some hidden judgment
call here that needs to be eliminated.
Empirical evidence?
• Why not push forward the empirical analysis of
whether Americans are unhappy about their
equilibrium and Europeans are?
• Alesina Glaeser and Sacerdote did a very little
piece of that but much left to do.
• Perhaps it is true that Europeans have chosen a
better equilibrium but a model alone is not going
to change many people's priors.
Editorial comments
• The there is too much theory and not enough
testing of theories for my taste.
• I would have liked to see more discussion of
related literature.
• Some statements are a bit cavalier and need to
be tone down.
• Some “judgment charged” statements should be
dropped.
• The paper needs a bit more structure and a
clearer story line.
Conclusion
• Fascinating topic.
• I wished the paper answered different questions;
I do not think it really answer the question of why
Americans work more and what share of the
difference can be attributed to various factors.
• Too much emphasis in dissecting how many
minutes people spend doing various activities.
Some of it is useful, but I think it is a bit
overdone.