 Technological Growth and Hours in the Long Run: Theory and EvidenceMagnus Reif, Mewael F. Tesfaselassie and Maik Wolters Economica, 2021, vol. 88, issue 352, 1016-1053 Abstract: Over the last few decades, hours worked per capita have declined substantially in many OECD economies. Using the standard neoclassical growth model with endogenous work–leisure choice, we assess the role of trend growth slowdown in accounting for the decline in hours worked. In the model, a permanent reduction in technological growth decreases steady‐state hours worked by increasing the consumption–output ratio. Our empirical analysis exploits cross‐country variation in the timing and size of the decline in technological growth to show that technological growth has a highly significant positive effect on hours. A decline in the long‐run trend of technological growth by 1 percentage point is associated with a decline in trend hours worked in the range of 1–3%. This result is robust to controlling for taxes, which have been found in previous studies to be an important determinant of hours. Our empirical finding is quantitatively in line with the one implied by a calibrated version of the model, though evidence for the model’s implication that the effect on hours works via changes in the consumption–output ratio is rather mixed. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:econom:v:88:y:2021:i:352:p:1016-1053 Ordering information: This journal article can be ordered from Access Statistics for this article Economica is currently edited by Frank Cowell, Tore Ellingsen and Alan Manning More articles in Economica from London School of Economics and Political Science Contact information at EDIRC. |
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