Why do Western Europeans work less than Americans? A recent study says it's more than mere cultural differences -- it comes down to politics and unionization.

Different work schedules date back to the 1970s, when unions in Europe began bargaining for more holidays, vacation days and a shorter workweek, says economist Bruce Sacerdote, one of the co-authors of the study, "Work and Leisure in the U.S. and Europe: Why so different?" completed in April.

In an interview with The Wall Street Journal Online, Prof. Sacerdote, a professor at Dartmouth College and researcher at the National Bureau of Economic Research, offered his views on why the workweeks have diverged, the likelihood of the shorter European workweek standing the test of globalization, and what recent labor-market developments could mean for American and European workers.

The Wall Street Journal Online: Looking at both hours worked per week, and weeks worked per year, Americans work more than Europeans. (See sidebar)

Your research found that up until the late 1960s, Europeans worked more than Americans. The trans-Atlantic shift came in the 1970s, when working hours in Europe decreased while remaining consistent in the U.S. What were some of the major regulations and policies responsible for the shift in Europe?

Prof. Sacerdote: Unions in Europe used their strength to bargain for more holidays, more vacation days and shorter regular work weeks. Rather than being one specific watershed event or regulation, this reduction in hours worked took place during the collective-bargaining process over a number of years. In addition to their strength at the collective-bargaining table, unions have also played a major role in the political process. Germany, France and Italy all have large amounts of federally mandated vacation time: 20, 25, and 20 days, respectively, on top of a generous number of holidays.

WSJ.com: Hours worked haven't declined in the U.S., and to a lesser extent in the U.K. and Ireland, due to the fact that these are countries with less welfare coverage, milder regulations, weaker union movements and more inequality, your report says. What's the likelihood of the "American model" spreading in Europe? Why do the U.K. and Ireland fall in between the "American model" and what your report calls the "Continental European model?"

Prof. Sacerdote: We can't say for sure whether the American model will spread in Europe or the other way around or neither. The one change we have seen recently is France's rejection of the 35-hour workweek as being too restrictive. All the countries are experiencing long-run growth in productivity per hour worked, and there is no obvious reason why the Europeans cannot continue to use some of this productivity growth for reduced hours rather than increased income from work.

Both in terms of hours worked and in terms of the size of the welfare state, the U.K. and Ireland tend to fall between the U.S. and continental Europe. We think this is due to the different political histories of the various countries and their current placement on the political spectrum. Relative to the U.S., continental Europe has been friendlier to the politics of the left than the politics of the right for the last half century. This is a consequence of having been the location of two world wars, having more-recently formed governments and having more proportional forms of democracy (relative to majority rule).

WSJ.com: Which system has the best balance between output and worker happiness? Is there an optimal balance between the two that produces the most productive worker within the hours worked, or might that be something that differs culturally from country to country?

Prof. Sacerdote: There is really no easy way to quantify which country has the better balance. Happiness, health and well-being are at pretty high levels in all of these places. In general, any modest reductions in hours worked will raise productivity per hour, but lower total output.

WSJ.com: The study finds that "places with more mandated vacations do seem to be a bit happier." Does this finding lead you to any recommendations for policy makers?

Prof. Sacerdote: Not really. Comparing happiness across countries is a tricky business given both differences in terms of language and interpretation. We're very far from being able to say definitively that the U.S. should impose a minimum number of vacation days or the Europeans should impose fewer.

WSJ.com: The Organization for Economic Cooperation and Development said that in 2003 -- the most recent data available -- gross domestic product per hour worked in France was 9% higher than in the U.S. What explains this difference, and what are the implications?

Prof. Sacerdote: Nine percent strikes me as high, but in general we are perfectly willing to believe that France has higher output per hour than the U.S., which is a fact discussed by [MIT economist Olivier] Blanchard and other researchers. It makes perfect sense given the declining marginal productivity in each hour worked. If you are only in the office for a short time, you focus on the most important tasks and get those critical jobs done quickly and efficiently. Think in terms of a retail store deciding what hours to keep. Each additional hour they stay open is likely to be less productive than the previously existing hours because most of the customers have already come and done their shopping.

WSJ.com: The report explains how leisure's effect on happiness created a desire among Europeans to take their vacations at the same time, typically in the month of August. But that may complicate competition in an age when the global economy never stops. Is globalization undermining this pattern of European vacations?

Prof. Sacerdote: Let's assume that by globalization, you mean increased trade in goods and services. If the Europeans are now dealing with their counterparts in the U.S. and Asia, who work throughout August, then perhaps disappearing for August becomes less easy to do. However, in practice we have seen no drop in European demand for August vacations. We've all adjusted to their schedule (in the sense of not expecting them to be there) rather than the reverse.

WSJ.com: You find that mandated holidays explain 80% of the difference in weeks worked between the U.S. and Europe, and 30% of the difference in labor supply. These vacation regimes are fiercely defended by the unions. How much do labor unions and labor regulations on both sides of the Atlantic account for the differences in weeks worked?

Prof. Sacerdote: Our figures show that American full-time workers are working about 46 weeks per year versus about 40.5 weeks for the Europeans. (See sidebar.) Most of this, as you note, can easily be accounted for by looking at the extra holidays plus extra mandated vacation days enjoyed by European workers. Thus essentially all of the weeks-worked difference (among full-time employed workers) could be attributed to differences in labor regulation and union bargaining.

There are also of course differences in the labor force participation rate, with the U.S. having 72% of people 15-64 in the labor force versus 60-65% for the Europeans. Much of this difference could be attributed to higher marginal tax rates in Europe as [Nobel Prize-winning economist Edward] Prescott, notes, and the much more generous public pensions in Europe, which encourage early retirement.

WSJ.com: The power of unions in the U.S. seems to be on the wane, as evidenced by the strife within the AFL-CIO. Do you see a direct or indirect effect on the American worker, and if so, how does that affect productivity compared with the Europeans?

Prof. Sacerdote: Clearly, declines in union power lowers the wage of the unionized workers, but may also make the firms more productive. And the lower wages and absence of union work rules can cause firms to increase employment. So the decline in U.S. unionization has huge implications for both workers and firms.