Figure 3.16 models the historical change in labor supply and consumption for an average US worker between 1900 and 2020. The diagram plots daily free time in hours against daily consumption in dollars. The 1900 budget constraint is represented by a line connecting the points (24 hours of free time, \$0 consumption) and (0 hours of free time, \$40 consumption), with the optimal choice shown as Point A (16, 38). The 2020 budget constraint is a steeper line from (24, \$0) to (0, \$250), with the optimal choice at Point D (19.5, 105). The model uses this framework to analyze the effects of the historical wage increase by decomposing the total change into income and substitution effects.

Figure 3.16 - A Model of US Labor Supply and Consumption (1900 & 2020)

This figure models the work-leisure choices across different countries on a graph with daily free time (14-24 hours) on the x-axis and daily consumption in dollars on the y-axis. Each country is represented by a specific point on a linear budget constraint, which extends from (24, 0) to a point on the consumption axis. At each country's designated consumption-leisure point, a downward-sloping, convex indifference curve is shown to be tangent to the budget line, signifying that this point is the optimal choice for workers in that country given their preferences and wage rate.

Indifference Curves of Workers Across Countries (Figure 3.25)

The Organisation for Economic Co-operation and Development (OECD) offers extensive data on household disposable income, a primary measure of economic well-being and purchasing power. This dataset is a common component in economic models, with researchers citing the access date to indicate the specific version of data used. As an example, the analysis of work-leisure choices across countries in Figure 3.25 is based on this dataset as accessed in June 2022.

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The Organisation for Economic Co-operation and Development (OECD) is an international organization that provides key economic statistics, such as data on average annual hours worked per worker and household disposable income, which are used to analyze economic trends.

Organisation for Economic Co-operation and Development (OECD)

A comprehensive analysis of historical trends in work and leisure, especially regarding the income-substitution effects of wage changes, draws upon a specific group of key sources. This group includes macroeconomic datasets from the OECD on average work hours and household income, alongside detailed historical data from academic studies like Huberman and Minns (2007).

Key Sources for Historical Analysis of Work-Leisure Choices

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

CORE Econ - The Economy 2.0: Microeconomics

OECD - Household Disposable Income

The Organisation for Economic Co-operation and Development (OECD) gathers and disseminates data on the 'Average annual hours actually worked per worker,' a vital resource for comparing labor patterns across countries and over time. To ensure data versioning, economic studies using this dataset specify the access date. For instance, the cross-country work-leisure analysis presented in Figure 3.25 utilized data from this source that was accessed in June 2022.

OECD - Average Annual Hours Actually Worked per Worker

This dataset from the Organisation for Economic Co-operation and Development (OECD) compiles data on how individuals allocate their time. It is a key source for analyzing labor trends and is used to create visualizations like Figure 3.19 (on gender gaps in paid work) and Figure 3.20 (on average paid and unpaid work by gender). The dataset was noted as accessed in June 2022.

OECD - Time Use

The Organisation for Economic Co-operation and Development (OECD) provides a dataset on the gender wage gap, accessed in June 2022. It is a primary source for creating visualizations that compare wage and work disparities across countries, such as Figure 3.19 (on gender gaps in paid work and wages) and Figure 3.20 (on average paid and unpaid work by gender).

OECD - Gender Wage Gap (Source Data)

A 2021 cross-country comparison (Figure 6.7) shows large differences in average unemployment duration. For example, it was 5-6 months in the US and Canada but over a year in other countries. This data offers a general idea of what an unemployed person might expect and underscores the severity of job loss, as lost income and benefits can persist for an extended period. The data is from the OECD dataset on average unemployment duration, accessed in December 2022.

Cross-Country Comparison of Average Unemployment Duration (Figure 6.7, 2021)

The manufacturing industry in higher-income economies exhibits a distinct structure regarding firm size and its contribution to employment. Based on OECD data from 32 countries, the sector is numerically dominated by small businesses; 83% of manufacturing firms have fewer than ten employees. However, large firms with 250 or more employees, while representing a small fraction of all firms (8%), are disproportionately important for employment, as they provide jobs for over half of the entire manufacturing workforce.

Structure of the Manufacturing Industry: Firm Size and Employment

A 2007 academic paper by M. Huberman and C. Minns, titled 'The times they are not changin’: Days and hours of work in Old and New Worlds, 1870–2000', was published in the journal *Explorations in Economic History* (Volume 44, Issue 4, pages 538-567). This study serves as a significant source of historical data regarding working hours in various countries.

Huberman and Minns (2007) Study on Historical Work Hours

The Penn World Tables is a database that furnishes international economic statistics. Version 10.0, which became available in 2021, is cited as a primary data source for constructing analyses of historical working hours, including the data presented in Figure 3.15.

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