Mr. Pessimister: you are wrong


Pessimister thinks all times past were better. But in case you haven’t noticed, these are clear long run trends in the U.S. economy–a successful market-oriented economy:

1. Working hours decrease while real salaries rise–the pie gets bigger and people have more time to spare.
2. Women labor force participacion has increased while household work decreases–given the payoffs, women are revealing their preferences towards non-household working hours.
3. The share of expenses in recreation goods increase while its price decreases–people are having fun!

There are no ifs or buts here: these are good news. So… how come? Jeremy Greenwood and Guillaume Vandenbroucke provide and answer in Hours Worked: Long-Run Trends:

For 200 years the average number of hours worked per worker declined, both in
the market place and at home. Technological progress is the engine of such
transformation. Three channels of effect will be stressed here.

First, technological progress increases wages. On the one hand, an increase in real wages should motivate more work e¤ort since the price of consumption goods in terms of forgone leisure has fallen. On the other hand, for a given level of work effort a rise in wages implies that individuals are wealthier. People may desire to use some of this increase in living standards to enjoy more leisure.

Second, the value of not working has also risen due to the advent of many new leisure goods. Leisure goods by their very nature are time using. Think about the impact of the following products: radio, 1919; television, 1947; monopoly, 1934; videocassette recorder, 1979; Nintendo and Trivial Pursuit, 1984.

Third, other types of new household goods have reduced the need for housework. These household goods are time saving. Examples are: electric stove, 1900; iron, 1908; frozen food, 1930; clothes dryer, 1937; Tupperware, 1947; dishwasher, 1959; disposable diaper (Pampers), 1961; microwave oven, 1971; food processor, 1975. Some goods can be both time using or time saving depending on the context: the telephone, 1876; IBM PC, 1984.

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