Across advanced economies, concerns about labour supply have taken centre-stage. In the US, policymakers debate declining participation rates and the role of social programmes, while in Europe the discussion increasingly centres on labour shortages and how to sustain workforce participation.

These policy concerns also speak to a broader economic question: why do some countries work more than others, and why do these patterns change over time? Cross-country differences in hours worked help shed light on the forces shaping work incentives, including taxes and benefits, labour market structure, social norms, home production, and productivity (e.g. Brüggemann et al. 2016). They are especially informative when trends, and not just levels, diverge across countries, since such divergence helps distinguish among competing explanations.

A particularly influential contribution to this area is Prescott (2004), who documented that while Americans and Europeans worked roughly the same number of hours in the early 1970s, by the mid-1990s Americans were working significantly more. The author argued that differences in tax systems could account for an important part of this gap. A large literature followed, extending Prescott’s analysis to more countries, longer time periods, and additional mechanisms shaping cross-country labour supply (Rogerson 2006, Ohanian et al. 2008, McDaniel 2011, Bick and Fuchs-Schündeln 2018, Bick et al. 2018, Boppart and Krusell 2020, Kopytov et al. 2023).

In our recent paper, however, we document that about half of the hours gap that had opened by the 1990s had closed by the end of the 2010s (Birinci et al. 2026). Motivated by this shift, we undertake a comparative study of the convergence in hours worked and, paraphrasing Prescott’s title, ask: why do Americans no longer work so much more than non-Americans?

A narrowing gap in hours worked: The US and other advanced economies

Our starting point is a simple but overlooked fact. Figure 1 plots hours worked per person for the G7 economies and marks 1996, the last year covered by Prescott (2004). As in Prescott, the figure shows that by the mid-1990s Americans were working substantially more than people in most other advanced economies. But it also shows something that has received much less attention: this pattern has partly reversed after the mid-1990s. US hours per person rose until the early 2000s and then declined, while many non-US countries experienced increases in hours after 1996. We show that when the US is compared to a broader set of advanced economies, about half of the hours gap that had opened by the 1990s had closed by the end of the 2010s.

Figure 1 Hours per person in the G7 economies

Notes: The figure shows the evolution of hours worked per person in the G7 economies from the OECD and Penn World Tables data. Hours per person are defined as total employment multiplied by hours per worker, divided by the population aged 15–64, following Prescott (2004). The dashed vertical line marks 1996, the endpoint of Prescott’s sample. Detailed construction of the figure can be found in Birinci et al. (2026).

The US decline has been widely documented. Studies link it to slower productivity growth (Elsby and Shapiro 2012), globalisation (Autor et al. 2013), automation (Acemoglu and Restrepo 2020), and changes in the value of leisure (Aguiar et al. 2021). By contrast, the rise in labour supply in other advanced economies has received much less systematic attention, despite being equally important for understanding the overall convergence.

Crucially, the convergence since around 2000 is driven primarily by changes along the extensive margin, that is, by changes in employment rather than in hours conditional on working. Employment rates have risen across many non-US countries, while stagnating or declining in the US. This pattern holds for both men and women, though the post-2000s convergence is especially pronounced for women.

A comprehensive framework of labour supply

To study the convergence in hours worked, we develop a labour supply framework that is tractable and comprehensive to compare the leading explanations. Our framework features four key elements: rich heterogeneity across individuals, both the intensive and extensive margins of labour supply, multi-member households where married couples can make joint decisions, and a detailed treatment of taxes and benefits upon non-employment. Together, these features allow us to study the main forces shaping hours worked across countries in a unified way.

With this framework, and using detailed US and harmonised international microdata, we run a horse race among competing explanations for the observed convergence, quantifying the roles of wages, the disutility associated with working, non-labour income, and tax and benefit systems across countries. Rather than focusing on a single mechanism in isolation, our approach lets us compare within a common framework the different, and potentially interacting, forces shaping labour supply across countries.

The US case: The growing role of non-employment benefits

In the US case, one factor plays a prominent role: the expansion of benefits available to non-employed individuals. Over the past two decades, these benefits have grown substantially in both scale and scope, encompassing programmes such as unemployment insurance, disability insurance, food assistance, housing subsidies, and public health insurance. As Figure 2 shows, this increase reflects not only the broad reach of these programmes among the non-employed, but also a marked rise in the value of benefits per non-employed person.

Figure 2 The evolution of benefits in the US

Notes: The figure reports statistics on benefits for non-employed individuals in the United States from the CPS with imputations from the authors, shown separately for singles and married households. Panels (a) and (c) show the share receiving benefits; panels (b) and (d) show benefits per non-employed person. Detailed construction of the figure can be found in Birinci et al. (2026).

Among these, health benefits play a particularly important role. Enrolment in programmes such as Medicaid has increased dramatically over time, extending coverage to a much larger share of the population. According to the official Medicaid and CHIP Payment and Access Commission, the number of Americans on Medicaid increased from roughly 20 million in the early 1970s to almost 100 million in the early 2020s. In our model, these benefits improve the outside option of not working, especially for individuals with relatively low earnings potential. We stress that this mechanism is more salient in the US, where the generosity of such benefits has increased over time and where health coverage is more closely tied to employment status and income than in many other advanced economies that offer core public coverage.

The non-US experience: Rising hours and participation

Outside the US, the increase in hours worked reflects a broader mix of forces rather than a single dominant factor. Higher potential wages contribute to rising hours in nearly all non-US countries, with Germany the main exception. In many countries, declines in the utility cost of work or in fixed costs of working also play an important role in raising hours.

Government tax and transfer policy matter as well, though their effects differ across countries. Except for Sweden, we find little role for changes in tax systems. In contrast, changes in benefits, are sometimes important. In the UK, France, and Spain, rising benefit replacement rates reduce hours worked, although, unlike in the US, these are offset by declines in the variable and fixed costs of work. In Germany, Italy, and Sweden, changes in benefits instead contribute to higher hours worked.

In sum, non-US countries generally experience rising labour supply because of some combination of higher wages, lower utility costs of work, lower fixed costs, and, in some cases, changes in benefits. Unlike in the US, however, no single factor stands out as dominantly as benefits do in explaining the decline in US labour supply.

Conclusion

By the 1990s, Americans were working much more than people in other advanced economies, but about two decades later roughly half of that gap had disappeared. We document the evolution of hours worked across countries and study this convergence. We develop a parsimonious labour supply model, discipline it with detailed micro and aggregate data, and use it to run a horse race among competing explanations.

A key finding is that US hours per person declined after 2000 in large part due to the rise in benefits available to the non-employed, especially health-related benefits. In non-US countries, by contrast, the rise in labour supply is generally accounted for by higher wages, lower fixed costs of working, and a decline in the utility cost of work.

References      

Acemoglu, D and P Restrepo (2020), “Robots and jobs: Evidence from US labor markets”, Journal of Political Economy 128(6): 2188-2244.

Aguiar, M, M Bils, K K Charles and E Hurst (2021), “Leisure luxuries and the labor supply of young men”, Journal of Political Economy 129(2): 337-382.

Autor, D H, D Dorn and G H Hanson (2013), “The China syndrome: Local labor market effects of import competition in the United States”, American Economic Review 103(6): 2121-2168.

Brüggemann, B, N Fuchs-Schündeln and A Bick (2016), “Hours worked in Europe and the US: New data, new answers”, VoxEU.org., 22 October.

Bick, A and N Fuchs-Schündeln (2018), “Taxation and labour supply of married couples across countries: A macroeconomic analysis”, The Review of Economic Studies 85(3): 1543-1576.

Bick, A, N Fuchs-Schündeln and D Lagakos (2018), “How do hours worked vary with income? Cross-country evidence and implications”, American Economic Review 108(1): 170-199.

Birinci, S, L Karabarbounis and K See (2026), “Why Do Americans No Longer Work So Much More Than Non-Americans?”, NBER Working Paper 35020.

Boppart, T and P Krusell (2020), “Labor supply in the past, present, and future: a balanced-growth perspective”, Journal of Political Economy 128(1): 118-157.

Elsby, M W L and M D Shapiro (2012), “Why does trend growth affect equilibrium employment? A new explanation of an old puzzle”, American Economic Review 102(4): 1378-1413.

Kopytov, A, N Roussanov and M Taschereau-Dumouchel (2023), “Cheap thrills: the price of leisure and the global decline in work hours”, Journal of Political Economy Macroeconomics 1(1): 80-118.

McDaniel, C (2011), “Forces shaping hours worked in the OECD, 1960–2004”, American Economic Journal: Macroeconomics 3(4): 27-52.

Ohanian, L, A Raffo and R Rogerson (2008), “Long-term changes in labor supply and taxes: Evidence from OECD countries, 1956–2004”, Journal of Monetary Economics 55(8): 1353-1362.

Prescott, E C (2004), “Why do Americans work so much more than Europeans?”, Federal Reserve Bank of Minneapolis Quarterly Review 28(1): 2–13.

Rogerson, R (2006), “Understanding differences in hours worked”, Review of Economic Dynamics 9(3): 365-409.