Non-Working Time, Income Inequality and Quality of Life Comparisons: The Case of the U.S. vs. the Netherlands. CES Working Papers, no. 153, 2008

Verkabel, Ellen, and DiPrete, Thomas A. (2008) Non-Working Time, Income Inequality and Quality of Life Comparisons: The Case of the U.S. vs. the Netherlands. CES Working Papers, no. 153, 2008.

Abstract

The distribution of well-being in society and comparisons of well-being across societies depend both on the amount of inequality at the national level and also on the national average level of well-being. Comparisons between the U.S. and western Europe show that inequality is greater in the U.S. but that average GDP/capita is also greater in the U.S., and most Americans have higher standards of living than do Western Europeans at comparable locations in their national income distributions. What is less well-known is that (depending on the country) much or all of this gap arises from differences in the level of working hours in the U.S. and in Western Europe. Cross-national comparisons of well-being have typically relied on the methodology of generalized Lorenz curves (GLC), but this approach privileges disposable income and cash transfers while ig-noring other aspects of welfare state and labor market structure that potentially affect the distri-bution of well-being in a society. We take an alternative approach that focuses on the value of time use and the different distributions of work and family time that are generated by each coun-try’s labor market and social welfare institutions. We show that reasonable estimates of the greater contribution to well-being from non-market activities such as the raising of children or longer vacations overturn claims in the literature that the U.S. offers greater well-being to more of its citizens than do Western European countries.