Are Europeans Really as Lazy as They Boast of Being?

by Don Boudreaux on March 7, 2005

in Myths and Fallacies

The Economics Focus column in this-week’s Economist (paid subscription required) is especially good.  It deals with the question: Are Europeans lazier than Americans?  (The wording is my own.)  The Economist‘s answer to this question is ‘probably not.’

(Note: Europeans boast about being lazier than Americans.  But by describing their alleged laziness as being “a higher preference for leisure” – or some such phrase – Europeans, and Europhiles, make their laziness sound positively glamorous.)

But The Economist sensibly doubts that Europeans really are significantly lazier than Americans.  Yes, yes there are raw data that are consistent with the proposition that Europeans are lazier.  The labor-force-participation rate in the E.U. is much lower than it is in the U.S.  Europeans also retire earlier, on average, than do Americans.  And Europeans take more vacation time than Americans.  These data are consistent with the thesis that Europeans are lazier than Americans.

But consider these facts reported by The Economist:

Only one in ten EU couples with small children said that they prefer to rely on a male breadwinner for their income, yet four in ten lived that way.  One explanation is that the incomes of second earners, who are usually women, are taxed at a much higher rate than the main earner.  In Germany, spouses of people on the average production worker’s wage must pay 53 cents in tax out of the first euro they earn.

And on the issue of retirement….

The OECD has attempted to measure the implicit “tax” on working for someone nearing retirement age.  This tax measures the pension and other benefits that old people forgo when they continue to work, expressed as a proportion of their wage.  A common problem is that the pension benefits cannot be deferred in their entirety in many countries.  If you keep working, some benefits are lost altogether and cannot be collected later.

For 55-year-olds in Germany and France, this implicit tax amounts to 50% of the average wage for people in that group.  For 60-year-old Dutch people, the loss of benefits is 90% of the wage; Belgians face an effective tax rate of 80%.  Faced with such arithmetic, why should older people bother to work?

You call it: Are Europeans lazy (as they boast of being) or taxed and subsidized obnoxiously?


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