The costs and benefits of a shorter workweek

Policy proposals like the four-day workweek have gained momentum in the aftermath of the Covid recession, raising the question of how many hours people would choose to work. This column uses survey data to establish people’s willingness to pay for additional leisure time in terms of forgone earnings, and vice versa. The findings suggest that many workers in Germany and the UK would happily pay for more leisure and that, thanks to productivity gains, tighter hours caps might bring net positive welfare effects even after accounting for a smaller tax base and reduced capital returns.

cepr.org