Work and Leisure

Chapter 5The economics of workand leisureChris Gratton and Peter TaylorIntroductionIn the early 1980s, economists joined with other analysts in forecasting thedawn of a leisure age in the United Kingdom (UK) (e.g. Vickerman 1980;Jenkins and Sherman 1981). There was a powerful economic logic to thisforecast, both theoretical and empirical. On the theory side, so long as leisureis a normal good demand for it would rise as incomes rise and there would bepressure for leisure time to increase as long as real incomes continued to rise.On the empirical side, production processes were experiencing increased substitutionof labour by technology, spending on leisure goods and services wasincreasing steadily, and long-term time trends demonstrated shrinking workhours, expanding holiday entitlements and increasing early retirements.What happened since then has blown apart such a clear-cut forecast. Theleisure age has not happened and in the UK at least there are signs ofincreasing work and reduced leisure, together with qualitative indications ofincreased pressures from work and domestic obligations. The core objectivesof this chapter, therefore, are first to review the standard economic theory onwork–leisure time choices by individuals, second to review major empiricalindicators of work and leisure time in the UK, and third to put the UKin an international perspective. These stages will enable conclusions to bedrawn about the efficacy of the standard economic theory, as well as likelydevelopments in work and leisure time.The income/leisure trade-offNeoclassical economic analysis assumes that the allocation of time betweenwork and leisure is driven by individuals’ decision-making. Rational utilitymaximisingconsumers are faced with a continuous choice over how to allocatetheir time, principally between leisure, paid work, and ‘obligated time’(for such activities as housework, hygiene and sleeping). Paid work is treatedas disutility and consumers need compensation in terms of income to persuadethem to give up their leisure time. If we make a simplifying assumption