Who wants a holiday?

The average American receives four weeks a year of paid leave, while the French get seven, and the Germans eight. Why is there such a disparity? Although there might be some truth in the continentals' love for the 'dolce vita', research shows that people's holiday habits stem from a more complex socio-economic web than just a penchant for idling.

by Knowledge@Wharton
Last Updated: 23 Jul 2013

True, cultural explanations do play a part: Americans value hard work more than their European counterparts, and social status has more to do with a new Porsche than a three-week holiday in the south of France. "It is a sign of social status in Europe to take a long vacation away from home," says Mauro Guillen, professor of management and sociology at Wharton. "Having fun, or being able to have fun, also is a sign of success and social esteem."

But the cultural card does not go far in the eyes of other sociologists. Ed Prescott, a Nobel prize-winning economist from Arizona State University, argues instead that since Europeans pay much higher marginal tax rates, they have little incentive to work US-style long hours. Why slave away 60+ hours a week instead of the required 37.5 if the government ends up taking most of it?

Peter Cappelli, a Wharton management professor, disagrees however. Many surveys show that given the opportunity, Americans would swap money for holidays. The problem, Cappelli says, is that it's not an option because working people harder is cheaper than hiring new staff. "In the US, there isn't much of a way for employees to rebel against that. Unions only represent a small proportion of people, and they are mostly blue collars."

Bruce Sacerdote from Dartmouth University and Alberto Alesina and Ed Glaeser from Harvard University, argue that strong European unions have more bargaining power and have used their leverage to negotiate more benefits - read holidays - for employees.

But, Sacerdote et al argue, contrary to received wisdom, it's out of necessity rather choice that unions negotiated more holidays rather than more money. In the 1970s, after a series of economic shocks, employers decided to lay off workers. In an effort to prevent mass unemployment, unions arranged shorter working hours and less pay in return for job security. Although the cost savings were not always obvious, longer holidays became a staple of the labour landscape.

Finally, Wharton management professor Nancy Rothbard also argues that many people simply can't afford holidays. "Some people might prefer to save for their children's college education or their retirement," Rothbard says. Besides with escalating fuel and airfare costs, holidays don't come cheap.

Source: Reluctant vacationers: Why Americans work more, relax less, than Europeans
Knowledge@Wharton July 26 2006

Review by Emilie Filou


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