This metric is calculated by dividing the total number of hours worked annually by the average number of people employed. It encompasses regular hours for all types of workers (full-time, part-time, part-year), both paid and unpaid overtime, and hours from secondary jobs. It specifically excludes any time not worked, such as public holidays, paid leave (annual, sick, parental), and time lost to industrial actions like strikes.

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The Organisation for Economic Co-operation and Development (OECD) compiles and publishes the 'Average annual hours actually worked per worker' dataset, a crucial resource for comparative analysis of labor trends across different countries and time periods. To maintain data integrity and version control, economic studies that utilize this dataset, such as the cross-country work-leisure analysis in Figure 3.25, are careful to specify the date the data was accessed (e.g., June 2022).

OECD Dataset: Average Annual Hours Actually Worked per Worker

This dataset, presented as a scatter plot in Figure 3.2, illustrates the wide disparities in free time and income across various countries for the year 2020. Free time is calculated by subtracting the average annual working hours from the total hours in a year. While the data suggests a general trend where higher-income countries tend to have more free time, it also highlights striking differences. For instance, France has much more free time than South Korea despite similar income levels, and the US has a significantly higher income than Poland despite workers in both countries having similar amounts of free time.

Annual Hours of Free Time and Income per Worker (2020) [Figure 3.2]

Figure 3.25 applies the work-leisure choice model to the data from Figure 3.24. It plots the daily consumption and free time for a representative worker in each country. For each country, a budget constraint is constructed as a line passing through the point of maximum free time (24 hours, \$0 consumption) with a slope equal to the wage rate. A crucial step in this analysis is the assumption that the observed data points represent the workers' actual optimal choices. Based on this assumption, the model allows for the inference of worker preferences by drawing hypothetical indifference curves tangent to the budget constraint at each country's observed consumption-leisure bundle.

Indifference Curves of Workers Across Countries (Figure 3.25)

Average Annual Hours Actually Worked per Worker

Directly comparing working hours across countries using statistical data is challenging due to methodological inconsistencies. Key limitations include variations in how self-employed individuals are counted, the degree to which the informal economy is captured, and different methods for estimating unpaid overtime. These discrepancies can distort the analysis of international labor patterns if not properly considered.

Limitations of Cross-Country Working Hour Data

Figure 3.16 presents a graphical analysis of the historical trade-off between free time and consumption in the US for the years 1900 and 2020. The diagram's horizontal axis represents daily free time in hours, ranging from 14 to 24, while the vertical axis shows daily consumption in dollars, ranging from 0 to 200. The 1900 data is represented by a budget constraint connecting (0 hours, \$40) and (24 hours, \$0), with the average choice at Point A (16, 38). The 2020 data features a steeper budget constraint connecting (0 hours, \$250) and (24 hours, \$0), with the average choice at Point D (19.5, 105). The slope of each budget line signifies the real wage for that year.

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