Economist.com

23:40 GMT +00:00
Leisure inequality

Posted by:
Economist.com | NEW YORK

Categories:
Income and poverty

INCOME inequality may be increasing, but income is not the only measure of welfare. Those at the lower end of the income spectrum have growing amounts of time on their hands. In a forthcoming QJE paper Mark Aguiar and Erik Hurst find that, on average, the amount of time devoted to not working (this includes household work) has increased over the last forty years. How do Americans spend their new free time? Overwhelmingly, staring at the idiot box. Reading and socialising have dropped, despite the newfound leisure.

The disparity in leisure time has also increased, though not in the way that anyone would expect. Workers with only a high school diplomas’ weekly leisure time increased by 6.74 hours, while college educated workers leisure time got a measly extra 0.56 hours. Perhaps not surprisingly, it was the college educated who experienced the largest decrease in time spent reading.

Does this mean that income inequality increased only because the poor and middle class work less? Not necessarily; the causation may run the other way. Leisure is a good like any other, and has a positive income effect; as people have more income, they want to consume more of it. Since low-paying jobs tend to be more unpleasant than higher paying jobs (journalism excepted), the income effect may be stronger at the bottom of the wage distribution. Since all income groups have seen real incomes rise over the last forty years, those in the bottom half may simply have decided that since they get paid more, they don’t have to work as much.

On the other hand, the substitution effect predicts that as changes in technology have disproportionably increased the salaries of skilled workers, the better paid are likely to have worked more. People with higher wages have a greater incentive to forgo leisure time. The less skilled face a smaller opportunity cost for their leisure. So they will work less.

Perhaps proponents of the thirty-five hour work week should stop talking about the poor, and focus on the beleaguered wealthy, oppressed by the laws of economics. Come to think of it, most of the people we see advocating for such policies look decidedly upscale . . .