It’s An Idea (not all) Economists View With Contempt…

As the derisive name suggests, it’s an idea economists view with contempt, yet the fallacy makes a comeback whenever the economy is sluggish. — Paul Krugman

Professor Krugman is currently “Distinguished Scholar at the Luxembourg Income Study Center, at The Graduate Center of the City University of New York.” Janet Gornick is the Director of the Luxembourg Income Study. The following excerpt is from Peter Frase and Janet Gornick, “The Time Divide in Cross-National Perspective: The Work Week, Gender and Education in 17 Countries.”  (Dec. 2009) Working Paper No. 526 in the Luxembourg Income Study Working Paper Series:

“Discussions of the work week, particularly among economists, often place a neutral or positive value on long hours. In the most common neoclassical model of labor supply, workers are assumed to work a number of hours that is consistent with their relative preference for consuming goods or consuming leisure time. Over short periods of time, fluctuations in the length of the work week are a business cycle indicator: employers will often reduce hours as an alternative to layoffs, so short-term reductions in the average work week are associated with recessionary periods. Over the long run, longer work weeks are often interpreted as reflecting a more productive economy; conversely, shorter work weeks are read as a symptom of an inefficient or overly rigid labor market (e.g. Rogerson (2008)).

“However, others have argued that even in narrow economic terms, very long hours are undesirable. Karl Marx, discussing British industrialization in the mid-19th century, argued that without legal restrictions on the length of the working day, capitalists would over-exploit workers to the point of physically degrading their capacities and undermining productivity (Marx 1990; Bourdieu and Reynaud 2006). Sydney Chapman (1909), working within the neoclassical tradition, made a similar argument: he proposed that in a free market, both employers and workers would choose a level of working hours that was greater than was optimal in terms of total output. This is due to the same tendency to degrade the productive power of labor that was observed by Marx: above a certain threshold, an increase in hours actually decreases the long-run level of output, because worker fatigue decreases productivity over the entire working day. However, because this new, lower-productivity equilibrium is only reached after a long period of over-work, employers and workers will tend to maximize their short-term profits and wages by agreeing to a working day which is above the long-run optimum. Moreover, a single firm will not have an incentive to restrain hours, if its competitors can hire away its well-rested workers at any time. This analysis implies that the work week could be reduced through collective bargaining or state policy without reducing the overall productivity of the economy. Over the 20th century, this perspective became marginalized within economics, but some have revived it more recently (Nyland 1989; Burkett 2000; Walker 2000, 2007). It is a line of argument that feeds into calls for “work-sharing” as a response to economic downturns, as well as debates over whether reductions in hours decrease or increase unemployment (Calmfors 1985; Booth and Schiantarelli 1987; Roche et al. 1996; Hunt and Katz 1998; Hunt 1999; Bosch and Lehndorff 2001; Kapteyn et al. 2004).

“Even when economically efficient, long hours may have other negative individual or social effects. Golden and Altman (2008) distinguish among three separate concepts: long hours, over-employment, and overwork. Long hours means simply hours that are longer than average. Over- employment refers to the situation in which workers are supplying more hours than they would like to, because employers do not offer work at the desired number of hours (conversely, workers who are offered work at a lower number of hours than they desire are under-employed). Overwork refers to an intensity or duration of labor that harms a worker’s physical or mental health due to fatigue or stress. By this definition, it is possible to be over-employed or overworked even if one is not working “long hours”, depending on preferences and job intensity; conversely, very long hours may be both voluntary and non-harmful to the worker. However, there is good reason to believe that long hours are associated with overwork and overemployment. Moreover, hours that are desirable and salutary for individuals may have negative social effects.”