The conventional view is that Americans work longer hours than Germans and other
Europeans but when time in household production is included, overall working time is very
similar on both sides of the Atlantic. Americans spend more time on market work but German
invest more in household production. This paper examines whether these differences in the
allocation of time can be explained by differences in the incentive structure, this is by the taxwedge
and differences in the wage differentials, as economic theory suggests. Its analysis of
unique time-use data reveals that the differences in time-allocation patterns can indeed be
explained by economic variables.
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