A Model of the Trends in Hours
22 Pages Posted: 29 Jun 2005
Date Written: December 2006
During the first half of the 20th century the workweek in the United States declined, and its distribution across wage deciles narrowed. The hypothesis proposed is twofold. First, technological progress, through the rise of wages and the decreasing cost of recreation, made it possible for the average US worker to afford more time off from work. Second, changes in the wage distribution explain the shift in the hours distribution. A general equilibrium model is built to explore whether such mechanisms can, quantitatively, account for the observations. The model is calibrated to match moments of the US economy in 1900. It predicts the trends in hours closely, from 1900 to 1950. Counterfactual experiments show that the rise in wages is the main contributor to the decline in hours. The decline in the price of leisure goods explain 6% of the total decline in hours.
Keywords: Hours worked, leisure, home production, technological progress
JEL Classification: E24, J22, O11, O33
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