Cheap Thrills: the Price of Leisure and the Global Decline in Work Hours
66 Pages Posted: 24 Sep 2020 Last revised: 12 Feb 2021
Date Written: February 11, 2021
The real price of recreation goods and services has fallen dramatically over the last century.
At the same time, hours per worker have also been on a steady decline. As recreation goods
make leisure time more enjoyable, we investigate if the fall in their price has contributed to the
decline in work hours. Using aggregate data from OECD countries, as well as disaggregated
data from the United States, we provide evidence that the two are strongly related. To identify
the effect of recreation prices on hours worked, we use variation in the bundle of recreational
goods across demographic groups to instrument for the changing price of leisure faced by these
groups over time. We then construct a macroeconomic model with general preferences that
allows for trending relative prices and work hours along a balanced growth path. We estimate
the model and find that the decline in recreation prices can explain a large fraction of the global
decline in work hours.
JEL Classification: E24, J22
Suggested Citation: Suggested Citation