Sunday, 28 February 2010

Data, data, data

Miguel below seems to be factually right. The average number of hours worked per week in Portugal was 38.6 in 1983 and 35.1 in 2009, a decline of about 10%. See here.


  1. This comment has been removed by the author.

  2. It seems to me that that number means close to nothing for the discussion that Miguel had with Tiago Mendes.
    Of course the reported hours of work must obey the legal limit. Therefore, no firm will report to have its workers working for more than 40 hours. This implies, of course, that on average the average reported hours will be below the legal limit. This is true even if 99% of the people are working 80 hours a week.
    On the other hand, if we take those numbers as the truth, which I don’t, then it implies the opposite of Miguel’s argument. They imply that people work less than the legal limit; therefore the legal limit is not binding. Relaxing a nonbinding constraint is the best way to achieve nothing.

  3. Luís, but if you don't think those numbers are reliable (and I take your point regarding the difference between reported hours and effective hours worked as valid) then we would have to know what portion of labour activity is really under this binding constraint. If it is small then Tiago is right. But if it is large than it could make some difference to relax the 40-hour rule.
    However, my last paragraph introduced the question of whether unit labour costs can be reduced with minimal nominal wage cuts since workers probably are working fewer hours due to low economic activity in general. That can complicate a lot the relationship between nominal wage cuts and unit labour costs reduction. Basically, that was my point.

  4. Miguel, if I understood correctly, I completely agree with you.
    I guess my point was a different one, and it was directed to Pedro. In the title of the post he writes "data, data, data", but then, in the body of the post, he writes facts (at least he says that you are "factually right"). My point is that data may be the best we have ("in God we trust, all others bring data") but data is not even close to be a fact. If nothing else, and there is much else, data has measurement errors, which can be serious.

  5. I agree with both. The data refers to the "reported" number of hours worked, and though we can expect that there must a positive correlation between this and the "true" hours of work, we cannot know exactly what goes under the reported numbers and probably we should focus on productivity instead.