Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/108807 
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper No. 5264
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We propose an explanation of why Europeans choose to work fewer hours than Americans and also suffer higher rates of unemployment. Labor market regulations, unemployment benefits, and high levels of public consumption in many European countries reduce, ceteris paribus, the gains from being employed, which makes employed workers ask for higher wages relative to productivity. The higher wages make firms offer fewer vacancies, as well as raising the opportunity cost of working by enabling employed workers to enjoy time-consuming consumption activities. We find empirical support for our thesis.
Subjects: 
job search
unemployment
working hours
JEL: 
J63
J64
J65
Document Type: 
Working Paper
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