Sweden surpasses the U.S in hours worked per person

In an influential study, Edward Prescott pointed out that until around 1970 Europeans worked as much as or more than Americans. Hours worked in the United States remains roughly the same while declining in most European countries. In Sweden most of this decline came following the recession starting in 1991, with hours worked dropping and not returning to prior levels even after the recession ended.

In recent years, Sweden has cut taxes and dramatically reduced the generosity of unemployment insurance and other program. The United States has however moved in the opposite direction, having government grow under Bush and explode under Obama. American labor supply has so far barely recovered following the 2008 crash.

Now a commonly assumed stylized fact in economics no longer applies, at least until the American labor market recovers. Sweden has caught up with and even slightly surpassed the United States in terms hours worked per working age adult. Continental Western Europe has not experienced the same recovery in its labor supply.

Namnlös

Hours worked per working age adult is estimated by dividing total hours worked in the economy with the 15-64 population, the potential labor force. It is a better measure than hours worked per worker, since it also takes into account the employment rate. Western Europe is defined as France, Germany, Spain, Netherlands, Denmark, Portugal, Italy, Finland, Greece, Iceland, Norway and Ireland.

Much of the increase in hours worked in Sweden is not higher employment rates, but more hours worked per employee due to lower absenteeism in sick-leave following reform of sick-leave benefits. I will write more about this later.

Among the 21 OECD countries with available data regarding hours worked per working age adult, the top five countries are Switzerland, Iceland, New Zealand, Australia and Canada. I doubt that it is a coincidence that all the top five are protestant culture countries.