1 “keeping in touch” - a benefit of public holidays joachim merz department of economics and...
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“Keeping in Touch”- A Benefit of Public Holidays
Joachim Merz Department of Economics and Social Sciences University of Lüneburg
Lars OsbergEconomics Department, Dalhousie University
CEA 2006
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The paper in one slide
Public Holidays co-ordinate leisure time Leisure time is often social
Greater utility if social match can be arranged But social contacts atrophy if not used
Public Holidays enable people to “keep in touch” More holidays mean more contacts - makes it easier to
arrange social life on normal workdays & weekends Benefits of holidays include increase in utility of
leisure time on normal workdays & weekends
German Länder have 13 to 17 public holidays This paper:
Presents model of time use with endogenous contacts Predicts greater social life on normal workdays &
weekends in Länder with more public holidays Tests hypothesis with time use data
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13 14 15 16 17
Berlin Brandenburg Nordrhein – Westfahlen
Baden-Württemberg
Bayern
Bremen Hessen Rheinland-Pfalz
Saarland
Hamburg Mecklenburg-Vorpommern
Sachsen-Anhalt
Sachsen
Niedersachsen Thüringen
Schleswig-Holstein
Public holidays in the Länder
Figure 1
Annual Number of Hours Worked per Person Aged 15-64 1
600
800
1000
1200
1400
1600
1800
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
year
annual h
ours Canada
France
Germany
Sweden
United Kingdom
United States
1 = Average hours worked per employed person *(Employment / pop. age 15-64) Canada and France 1999, 2000 and UK, US 2000 are extrapolations.Sources: hours of work: Key Indicators of the Labour Market 2001-2002, International Labour Office population and employment data: OECD Health Data 98 CDROM, "A Comparative Analysis of 29 Countries".
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Context: The Debate over the Growing Trans-Atlantic Lifestyle Divide
25 years ago - not much difference in annual work hours per working age adult
Divergent trends 1980-2000: Increased work hours in USA (+ 234) Decrease in Germany (-170), France (-210)
per adult per week: Germany - USA = - 9.7 hours 3 components
Common entitlement to Public Holidays & Vacations Labour Force Participation (women & older men) Normal weekly hours of employed
influence of unemployment rate differential is small Contentious literature
Bell and Freeman (2001), Alesina,Glaeser and Sacerdote (2005), Prescott (2004)
What are the welfare implications?
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“Social Leisure” literature
Osberg (2003), Jenkins & Osberg (2005) “Nobody to Play With” – labour supply externalities
Corneo (2005) re private (TV) & social leisure Hamermesh (2006) time zones & work, TV, sleep Weiss (1996) re work hour coordination Spousal synchronisation of work schedules (Hallberg,
2003, Hamermesh (2002)-USA; Sullivan, 1996, GB; van Velzen, 2001, NL)
This paper: public holidays as a co-ordination device present contacts - endogenous to past social life social time use on normal workdays and weekends is
affected by the number of public holidays
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Public Holidays as a Leisure Co-ordination Device
Public holidays imply individuals have leisure time at the same time,
But public holidays are not a binding constraint on annual leisure consumption Bavaria has most public holidays (17) in Germany
Bavarians have 348 other days each year to compensate any unwanted “excess” leisure
Both workers and firms have multiple possible margins of adjustment
shorter private vacations weekend working longer hours of work on normal workdays new jobs with different hours second jobs.
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The core hypothesis:“Have a life” = “have a social life”
What people do in their non-work time … often involves other people often distinctly more pleasurable if done with others
Heterogeneity of leisure tastes implies individuals have to locate “Suitable Leisure Companions” – a.k.a. ‘somebody to play with’
– and schedule simultaneous free time when paid work absorbs more of other people’s
time, each person finds own leisure time scheduling problem more difficult to solve,
i.e. own leisure hours are of less utility externality to individual labour supply choices,
possibility of multiple, sometimes Pareto-inferior, labour market equilibria
social payoff to leisure co-ordination devices
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Our model: work (H), or spend non-work time alone (A) or in social leisure (S).
To enjoy social leisure, each individual must arrange a leisure match from among the list of possible contacts that they have at the start of each period Contacts expire if unused in D periods
Each period, individuals first must commit to specific duration & timing of work hours H, after that they arrange their social life
H money income utility from material consumption Ex ante, utility from social life is uncertain:
search for Suitable Leisure Companions involves uncertainty, since some desired matches may not be feasible.
contacts not revisited within D periods expire Time spent alone not working, A, is the residual after work
and social commitments are honoured. U = u(C, A, S1, …, Sn,)
where i indexes possible Suitable Leisure Companions; 1,…,n where n is the number of realized social leisure matches
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Solving the time use problem
Arranging a social life - cannot be done unilaterally discrete matching process involved: => uncertainty constrained by: social contacts, availability of other people
Expected utility of specific social leisure match = pi u(Si) i indexes each potential SLC pi is Prob(social match with i) u(Si) is utility associated with that match.
maximise expected utility:
max (U)=u(C) + ik piu(Si)
+ uA[T – H – ik pi(Si)]
subject to: kt = θ + f(ti,t-D (Sit))
and pi , T , w , D
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Model equilibrium illustrated
H* T
A* S*
u*
U
MUH
MUA
MUS
a
r
0
Equilibrium implies work hours H* such that u* = MUH*, and A*, S* such that MUA* = MUS* = MUH*.
MUS* , MUH* are ‘expected’ marginal utilities: uncertainty ex ante via pi
= Prob(social match with i)
pi is negatively associated with own work hours and with non-overlapping work hours of potential SLC i.
The implications of keeping in touch (or not)
MUH
MUA
MUS
MUS ‘
u*
H* H**
A*A**
0 T
Fewer past social matches kt pi(Si) MUS
Given equilibrium condition, H* to H**, and S* to S**.
Effect on A* ambiguous.
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The German Time Use Study 2001/02
37700 time use diaries from 12600 persons in 5400 households.
diary kept by all household members over age 10 respondents recorded the course of 3 days in own words Survey days randomly selected & evenly distributed over
12 months. duration of individual activities recorded in 10 minute
intervals. primary + secondary activity respondents were asked with whom primary activities were
performed (children under 10 years, spouse/partner, other household members, other acquainted persons)
+ location of activities and any travel time in connection with the primary activity recorded.
population = all private households shown in the micro-census at their place of main residence
i.e. the German speaking foreign population was included.
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Dependent Variables
Daily Individual Diary records: Entertainment outside home Meetings Social Time
time spent in leisure activities with person outside household of residence
Household interview: weekly time on main job + job2 + commute unpaid time spent helping others outside
household in last 4 weeks
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Average time usage: non-holiday weekdays by Lander type
mean minutes lhs >=0
weekdaysLander
type
0 1 2 3 4 all Länder
entertain 10.48 9.00 12.91 14.37 11.67 12.00
meetings 2.30 2.09 2.36 2.90 2.78 2.48
Social time 110.41 109.94 119.92 117.07 107.44 114.34
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Regression Analysis: – do more public holidays enable more social contacts & a better social life?
Sample – Germans aged 25 to 54 Post school & pre-retirement Germany – relatively high total leisure
Controls for: Age, gender, education, health Employment status, work timing &
fragmentation, total daily work hours Equivalent individual income (= Yh/Nh
.5)
Number of co-habitants, presence kids <6 Temperature, sunhours, rain on survey day
OLS + Heckman sample selection bias Non-linear specification tests diminishing
returns to additional holidays Range = 1..4
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Time Use on Non-Holiday Weekdays Germany 2001-02
Entertain Meetings Social time OLS HECK OLS HECK OLS HECK
ltype 3.56 38.57 -0.81 -16.65 12.97 8.96 0.01 0.06 0.10 0.11 0.00 0.25
ltypesq -0.71 -7.09 0.31 4.18 -2.85 -2.04 0.03 0.09 0.01 0.24 0.00 0.27
mills lambda 230.27 49.34 -59.65 0.00 0.28 0.00 0.69 0.00 0.69
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Other Benefits of Public Holidays
Common enjoyment of festivals Adds to utility of participants on the day Builds social cohesion & social capital
Direct utility value Faster growth, better health, lower social costs
Putnam (2000); Knack & Keefer (1997); Osberg (2004). Increases mutual assistance between families
Plus gain in utility of leisure time on non-holiday weekdays & weekends
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Total Number of National Public Holidays by Country
Canada 12* Italy 13* Luxembourg 14* Mexico 15 New Zealand 11 Norway 14 Singapore 8 Russia 11 Spain 14* Sweden 15.5* Taiwan 14 Thailand 8* Ukraine 13
Switzerland 10* United Kingdom 9* USA 10* Hungary 11 France 13* Australia 10* Belgium 12 Denmark 12.5 Egypt 7 Germany 13* Portugal 15* Poland 11
* = + local holidays
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No Necessary Effect on Labour Demand !! Public Holidays only change the composition of the actual hourly wage
Paid Vacations & Holidays are “fringe benefit” of jobs – but Holidays not decided at workplace level
wN = nominal hourly wage rate per hour paid V = hours of paid vacation P = hours of paid public holiday LU = unpaid leisure time Total leisure = V + P + LU
w = labour cost per hour actually worked (in year) H = hours actually worked
w = [(H+V+P)* wN] / H Change in P changes composition of actual wage
Workers – labour supply – desired H for given w Firms – labour demand – desired H for given w No reason for equilibrium (w, H) to change
Vacations, unpaid leisure, nominal wage (LU ,V, wN) can offset P
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conclusion
German data shows benefits for social life of more public holidays over the range 13-17 Canada & USA now below Germany in
public holidays
Why not have more public holidays?
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Costs of an additional holiday ? Congestion in use of leisure facilities on holidays ?
- would fall as number of holidays rises- “stay-home” option is always available on
holidays holiday users must perceive net benefit from
usage at peak periods
Firms now using capital stock 24/7 would pay extra holiday premium on a new holiday Firm/Worker transfer – not a social cost
Social cost = loss of consumer surplus on any investment discouraged by 1/380th higher annual wage bill
BUT most firms now leave their capital stock idle when not “open for business” i.e. any readjustment of work timing would readjust the
timing of capital usage