Working hours in
Canada and the United States
by Andrew Heisz and Sébastien Larochelle-Côté
Business
and Labour Market Analysis Division
Analytical Studies Branch research paper
series, No. 209
There have been significant developments in working hours
during the past two decades, both domestically and internationally. Hours have
tended to polarize (more people working longer, and more working shorter hours),
and there has been a significant divergence in average annual hours worked internationally.
In particular, annual hours have increased in the U.S., remained more or less
stable in Canada, and fallen in some European countries like France and Germany.
This paper asks why the divergence between hours worked in Canada and the U.S.
occurred.
The paper focuses on working hours on a per person (total population)
and per worker (employed persons) basis for 16 to 69 year olds. During the 1980s
(1979 to 1989), average hours per person increased by 7.9% in the United States
and by 7.5% in Canada.
However, in the 1990s (1989 to 2000), working hours
developed quite differently in both countries. In the U.S., annual hours worked
per person grew by 5.4%, mostly because of rising work hours of prime-aged workers.
In Canada, hours declined by 1.5%, related to declining employment rates of younger
and prime-aged men. Altogether, the gap in annual hours worked per person rose
by 7% between the two countries in the 1990s. Two thirds of this change was associated
with a rise in hours worked per worker in the U.S. and one-third to a decline
in employment rates in Canada.
How can we explain such a gap? One possibility
put forth by prominent American researchers is that Americans have a higher incentive
to work more hours because of their more unequal distribution of wages. For an
American, working harder today might improve their prospects of getting better
wages and promotions in the future, and the potential gains from such changes
are greater in a country with high wage inequality. Hence, the incentive to work
harder/longer is greater in the U.S. Another possibility is that Canadians simply
chose to work less in the 1990s due to preferences or personal considerations.
This paper finds little support for either of these hypotheses.
Differences
in the business cycle provide the most promising explanation for the gap. The
paper shows that over the last two decades, Canada-U.S. differences in hours were
highly correlated with Canada-U.S. differences in unemployment rates. It suggests
that the explanation for the relative difference in hours in the two countries
lies in relatively sluggish labour demand in Canada compared to the U.S.
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