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North American divergence in the work week : U.S. manufacturing workers put in more hours than their Canadian counterparts

Summary:
[embedded content] This graph shows the average weekly hours in manufacturing for two neighboring countries: Canada and the United States. To make the numbers comparable, we made sure to use the same source for both: the Main Economic Indicators of the OECD. (The OECD tries to keep data definitions uniform across member countries, which is often a problem for labor market data.) What’s striking is that both countries looked similar early on in the time series but then diverged. One might assume that, as economies become more intertwined, they would also become more similar. So what’s going on here? Sadly, we don’t have an answer, but we can list some potential answers. First, economic integration across countries doesn’t necessarily make countries more similar. Indeed, integration

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This graph shows the average weekly hours in manufacturing for two neighboring countries: Canada and the United States. To make the numbers comparable, we made sure to use the same source for both: the Main Economic Indicators of the OECD. (The OECD tries to keep data definitions uniform across member countries, which is often a problem for labor market data.) What’s striking is that both countries looked similar early on in the time series but then diverged. One might assume that, as economies become more intertwined, they would also become more similar. So what’s going on here?

Sadly, we don’t have an answer, but we can list some potential answers. First, economic integration across countries doesn’t necessarily make countries more similar. Indeed, integration provides opportunities for specialization, thanks to comparative advantage. It could be that Canada has specialized in manufacturing sectors where the standards for work hours are lower. Second, labor market legislation may have changed. Indeed, current laws may give workers more bargaining power in Canada than in the U.S. In particular, unions currently have more say in Canada, and their goal is typically to improve the situation of their members (for example, by reducing work hours). Third, the labor practices of these countries that relate to the use of overtime or undertime may have become more different over the years. If employers prefer to use overtime instead of hiring new people, then average hours increase. The opposite happens when workers are given fewer hours instead of being laid off.

How this graph was created: Because the OECD data for the U.S. will not be among the first choices in a typical search, it’s better to search through the data sources to find the OECD. Look for the relevant table for “Main Economic Indicators” for the U.S. and then click on the series name (we took the quarterly seasonally adjusted one). From the “Edit Graph” panel, open the “Add Line” tab and search for the Canadian series to add.

Suggested by Christian Zimmermann.

About FRED Blog
FRED Blog
The Federal Reserve Bank of St. Louis is the center of the Eighth District of the Federal Reserve System. This District includes Arkansas, eastern Missouri, southern Illinois and Indiana, western Kentucky and Tennessee, and northern Mississippi.

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