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South America Travellers ,

South America @ Travel Notes -- Online Travel Guides -- Latin American Countries& The Caribbean Car Hire Cruises Flights Hotels Tours Vacations About Travel Notes™ Destinations Budget Travel Feedback Search Travel Forums Travel Writers Africa Asia Caribbean Europe Middle East North America South America Oceania Countries in Latin America Anguilla Antigua Argentina Aruba Bahamas Barbados Belize Bermuda Bolivia Brazil BVI Cayman Islands Chile Colombia Costa Rica Cuba Dominica Dom. 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Georgia Suriname Uruguay Venezuela Food Travel Fiction Health Kids Bios Humor Mags Software Gifts Tech Business Other Your Ad Here Travel Notes Mailing List News Headlines World News Directory of newspapers and news sources from around the world. Hotel City Search : Travel Notes ™ guides you around every country in Latin America and The Caribbean . Map of Latin America -- 1800-Countries.com Free Maps for Personal Webpages Mismapping of America Map of South America (North) Map of South America (South) Visiting Central America By Air Grupo Taca : Alliance of the main airlines in Central America: Aviateca (GU), Lacsa (LR), Nica (6Y) and Taca (TA). No other airline offers more direct service to Central America from more cities in the United States, Mexico, the Caribbean and South America. Spanish America Learning Spanish : This free online tutorial includes written and oral exercises in some 50 separate topics. If you're travelling in Latin America, you'll be glad you studied a little Spanish. Native Indians Indians.org : Native Indian culture and literature. Columbus Columbus Navigation : Briefly examines the History, Navigation, and Landfall of Christopher Columbus in what he thought was the Indies. It was Amerigo Vespucci who realised that they had discovered a continent. An excellent links pages takes you further on the trail of discovery. Eco Tourism in Latin America El Planeta Platica : The Eco travels website, with archives of Ron Mader's ecotourism newsletter. Volcanoes in Latin America : Volcano World should be a bookmark in any classroom. This site erupts with information. South America Travellers South American Handbook : This is one book you shouldn't travel to South America without. As it's not just aimed at budget travellers, it beats the pants off Lonely Planet's South America on a Shoestring . If you're visiting many countries in South America this is the guide for you. Luke's South American Diary : Luke's anecdotes of day-to-day life while bringing up a small child abroad was written while living in Venezuela and Colombia during 1994-9. The collective pages form a kind of travelogue of Luke's travels in Venezuela , Colombia , Ecuador , Peru , Bolivia , Argentina and Chile . Around Latin America LANIC -- Maps of Latin America : Links to various websites hosting maps of Latin America. South America Tours Kon-Tiki Tours : Full-service travel agency in New York, offering a variety of customisable South America tour packages. Southern Explorations : Small group tours and cruises to the Galapagos Islands, Peru, Costa Rica, Patagonia in Chile, Ecuador, Bolivia and the Amazon Rainforest. Latin America Travel Forum : From Anguilla to Venezuela, sailing in the Caribbean to trekking in the Andes, Latin America is a world of wonderful contrasts. Join us in the travel forums if you have a question about Latin America or would like to share your experiences about travelling or living in Latin America and The Caribbean. The Internet TravelNotes.org Footprint South America Flight Tickets : Save money on Round The World flight tickets. Travel News : Get the inside scoop with the latest travel features and tips. Past Articles . Airlines & Airports : This travel article points you to airlines and the three letter airport codes with links to their websites. Currency Converter : How much is your money worth abroad. Cyber Cafes : The Internet Caf Guide. Travel Guides : Travel guides are a Godsend and a tremendous amount of research has gone into them; but which one is best for you? 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Cruise Vacations Panama Canal

Hawaii Cruises,Hawaiian Islands,South Pacific Cruises,Hawaii CruisingVacations. Welcome to Cruiseweb.com Save Time! Save Money! Call 1-800-377-9383 Book Online ! Search Online ! . Receive E- mail specials! Home Free Quote Discount Cruises Book Online Search Online Cruise Lines Cruise Destinations About Cruise Web Group Cruises Business Meetings Incentive Awards Privacy Policy Questions? Call us: 1-800-377-9383 Cruise Lines: Carnival Cruise Lines Celebrity Cruises Costa Cruises Cunard Line Crystal Lines Holland America Line Norwegian Cruise Line Orient Lines Princess Cruises Radisson Seven Seas Royal Caribbean Seabourn Cruise Line Silversea Cruises Windstar Cruises Cruise Destinations: Africa Cruises Alaska Cruises Alaska Cruisetours Antarctica Cruises Asia/Orient Cruises Australia/New Zealand Bahamas Cruises Bermuda Cruises Caribbean Cruises Canada/New England Europe Cruisetours Greek Isles Cruises Hawaii/South Pacific Mediterranean Cruises Mexico Cruises Cruises from New York Northern Europe/Baltic Orlando Cruise Vacations Panama Canal Cruises South America Cruises Orlando and Cruise Vacation Packages Seven night Orlando Theme Park/Disney packages include a three or four or fivenight cruise,accompaniedby a four or three or two night (pre- or post-cruise) Orlando/Disney resortstay with theme parktickets. Discover some of central Florida's many attractions, such as Sea World of Florida, Kennedy Space Center, Cypress Gardens and Busch Gardens with its many amusement rides and fascinating animal exhibits. Preview an Orlando and Cruise Vacation Packages with one of ourpreferred cruiseline: Carnival Cruise Lines Pricing &Information? Ourcruise specialists will save you Time and Money! Guaranteed Lowest Price! * - The CruiseWeb guarantees its quoted price will match or beat the cruiseline's lowestavailable price available directly to the public at the time ofbooking. [* complete details ] Privacy guaranteed: we do not sell or give your information to third parties. Complete the brief form below and a cruise specialist will contact you: First Name * : * Required Fields Last Name * : Email * : Daytime Phone * : Evening Phone * : Optional Fields: Destinations: No Preference Africa/India Alaska Alaska Cruisetours Antarctica Asia/Orient Australia/New Zealand Bahamas Bermuda Canada/New England Caribbean Europe Europe Cruisetours French Polynesia/Tahiti Hawaii/South Pacific Mexico/Mexican Riviera Orient & Asia Panama Canal South America Cruise duration: No Preference 1-7 Night 8-14 Night 15 Night or longer Stateroom Type: No Preference Grand Suite w/ Balcony Suite w/ Balcony Mini Suite w/ Balcony Oceanview Double w/ Balcony Oceanview Stateroom Interior Stateroom Departure Date: Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year 2004 2005 2006 Comments: Yes, I want to receive free "CruiseDeals!" emailspecial offers fromThe Cruise Web. The Cruise Web (sm) is an Official Travel Agency for the Cruise Industry. Cruise Help: 1-800-377-9383 : Mon-Fri 8am-9pm, Sat9am-5pm, Sun 10am-5pm (EST) E-mail / Fax: 1-240-487-0154 / Phone: 1-240-487-0155 Address: 8100 Corporate Drive; Suite 300; Landover, MD 20785-2256 |  CRUISEWEB.COM |  Special Offers | Book Online 24/7 | Search Online 24/7 | Free Quote: Lowest PriceGuaranteed!* |  © 1995 The Cruise Web, Incorporated

France Travel

France Travel Guide - French Trip Planning, French Culture and Destinations  You are here: About > Travel > France for Visitors Travel Go France Essentials New Year's Eve in Paris and France Worst of France 2005 Paris Travel Guide Top French Ski Resorts Best New Year's Eve Champagne Articles & Resources Destinations Trip Planning Transportation Interests & Situations Money, Safety & Issues Things to Do in France Where to Stay in France Staying Connected Blogs Picture Galleries Culture, Language & People Fun, Freebies & Quizes Relocating to France Nudism, Sex & Gay Travel D-Day & Historic Travel Buyer's Guide Before You Buy Top Picks Sites Selling French Products Before You Buy the Gift of Travel Gifts for the France Fanatic Product Reviews Forums Help FREE Newsletter Sign Up Now for the France for Visitors newsletter! See Online Courses   Search France for Visitors From Kelby Carr , Your Guide to France for Visitors . FREE Newsletter. Sign Up Now! Lose Weight with the French Diet The French eat rich foods, drink lots of wine and smoke. So why are they so thin and fit? Recent news reports have touted the wonders of the so-called French diet. Just what is the secret to the French paradox? During the time I lived in France, I ate whatever I wanted (think chocolate croissants for breakfast, tartes aux fruits rouges at night for dessert). I never dieted, and I never went to the gym. I indulged in wine. Yet I lost a significant amount of weight during that time. My theories why the French diet works are in my article, Lose Weight with the French Diet: Unraveling the Mysteries of Why it Works . Wednesday December 28, 2005 | permalink | comments (0) Worst of France 2005 The year 2005 was a tough one for France, as rioting spread throughout the nation and the grand city of Paris lost its front-runner bid for the Olympics. Here is a recap of the bad headlines of 2005 for France with Worst of France 2005 . Wednesday December 28, 2005 | permalink | comments (0) Top Ski Resort Hotels in France France features some of the world's best skiing, be it in the mesmerizing Pyrenees mountains lining the Spanish border or the magestic Alps along the Italian and Swiss borders. France also encompasses no less than five other mountain ranges. The hotel accommodations at some of these resorts range from upscale and luxurious to inviting and cozy. This list of Top Ski Resort Hotels in France features the best places to stay for French ski enthusiasts. Monday December 26, 2005 | permalink | comments (0) New Year's Eve in Paris and Other French Cities The French really know how to celebrate New Year's, whether it's clubbing in Paris or the sublime midnight grape-picking event in the Midi Pyrenees or an upscale, medieval celebration in a Loire castle. Find out how to plan a New Year's Eve visit to Paris or France , and which events and festivals are planned for the turn of the new year. Even if you can't zip over to Paris to celebrate, you'll also find tips on finding French New Year's Eve parties in your town or even how to plan a France-themed New Year's Eve party at your own house! Bonne fete! Wednesday December 21, 2005 | permalink | comments (0) Top French Champagnes and Sparkling Wines Looking for a last-minute gift idea? Planning a New Year's Eve get together? If you plan to celebrate with some bubbly, you want to be sure you do it in style. You can get a crappy grocery store sparkling wine, but only vintages from the Champagne region are truly called Champagne. There is also a small village in France that claims it, in fact, invented sparkling wine centuries ago. Here is a list of the Top French Champagnes and Sparkling Wines for New Year's Eve, wedding toasts, celebrations or just for fun for all price ranges! Friday December 16, 2005 | permalink | comments (0) Christmas 2005 Gift Guide for Francophiles, Travelers and Foodies Here is the Christmas 2005 Gift Guide , filled with some of the top gifts for travelers, francophiles and foodies. The guide also includes buying advice for choosing travel guidebooks as gifts, how to create a French gift basket, as well as tips on giving the gift of travel. Whether the recipient on your list loves gourmet food gifts, French wine, home decor items, is planning a honeymoon or simply adores anything trs francais , you can find the perfect gift and buying advice here. Friday December 16, 2005 | permalink | comments (0) Most Romantic Paris Hotels Paris is the city of romance, and a tremendously popular destination for couples, lovers and honeymooners. The city is filled with cozy, intimate romantic hotels and accomodations. Be sure you get the best of this snuggle time with this list of Most Romantic Paris Hotels . Thursday December 15, 2005 | permalink | comments (0) Top Budget Paris Hotels Paris is one of the world's most expensive cities, but it's also one of the top tourist attractions. Find out how to conserve your cash for the finer thinks, like a fabulous dinner or incredible shopping, with this list of Top Budget Paris Hotels . It features high-quality cheap places to stay in Paris. Monday December 12, 2005 | permalink | comments (0) Top Upscale, Luxury Hotels in Paris If you're going to visit the luscious city of Paris and you have the means, why not do it in true style? Paris has some of the world's finest, most luxurious hotels. This is a city that is well-suited to upscale services. Get a list of the Top Upscale, Luxury Hotels in Paris , which includes prestigious names like the famous George V, Ritz Paris and even a bona fide castle outside of the city. Friday December 9, 2005 | permalink | comments (0) Hot Deal for Visiting Paris in the Springtime You've just gotta love Paris in the Springtime. But then, so does everyone else, driving up those prices. But the France Tourism Office and Gate 1 Travel are offering a hot bargain, allowing you to get a 6-day Paris spring fling for $499 per person, airfare and hotel included. Find out more on the Paris Tourism Office site. It would make an incredible Christmas gift, but be sure to consult my advice on what to do Before You Buy the Gift of Travel . For more on Paris, be sure to see: Paris Travel Guide Top Paris Travel Guidebooks Free Things to Do in Paris How I 'Do' Paris Wednesday December 7, 2005 | permalink | comments (1) Email to a Friend Display Latest Headlines | | | Read Archives Advertisement Related Blogs Dispatches from France Blog Paris Blog French Word-a-Day Blog La Coquette Blog Chroniques dune Fraise Nice Blog Rsidence Les Marronniers Provence Blog L'Oiseau Blog Chocolate and Zucchini Blog Forty Days in Paris Blog Most Popular "Naked City" Christmas in Paris Photo Tour Paris Sex District Top Paris Attractions Christmas in France What's Hot New Year's Eve in France Paris Gay Pride Parade Host A France-Themed Party Nice, France Photo Gallery Camping in France Related Topics Europe for Visitors French Language French Cuisine Honeymoons / Romantic Getaways Wine        Topic Index | Email to a Friend Our Story | Be a Guide | Advertising Info | Work at About | Site Map | Icons | Help User Agreement | Ethics Policy | Patent Info. | Privacy Policy | Kids' Privacy Policy ©2005 About, Inc., A part of the New York Times Company . All rights reserved. Around About New Video iPod - Review POLL: Must-Have Gadgets VIDEO: Portable Gaming VIDEO: Choosing a TV Hugh Hefner's Life What's Hot New Year's Eve in France Paris Gay Pride Parade Host A France-Themed Party Nice, France Photo Gallery Camping in France Headlines Lose Weight with the French Diet The French eat rich foods, drink lots of wine and Worst of France 2005 The year 2005 was a tough one for France, as Top Ski Resort Hotels in France France features some of the world's best skiing, be it New Year's Eve in Paris and Other French Cities The French really know how to celebrate New Year's, whether

European Vacation There's a

Federal Reserve Bank of Minneapolis - The Region - European Vacation (December 2003) I'm at: Home > Publications > The Region > December 2003 > Article Publications Expand All Collapse All The Region Index by Issue Interviews President's Columns fedgazette Index by Issue Topics Index Annual Report Quarterly Review Community Dividend Banking and Policy Studies Articles Toolbox ( advanced search ) December 2003 European Vacation There's a simple reason Americans work longer hours than Europeans, says economist Ed Prescott. And it isn't what you think Douglas Clement Editor It's no secret that Europeans work less than Americans do. Every Labor Day the media tell us that Europeans have just enjoyed weeks of summer vacation while Americans have been toiling away. These stories often depict Americans as hard-working drones who revere material possessions above all else. Europeans meanwhile bask in the good life of long lunches and months at the beach. There is some truth to the portrayal, at least in terms of hours worked. The International Labor Organization reports that the average American worked 1,815 hours in 2002, well above the comparable figures for France (1,545) and Germany (1,444), for example. (The average South Korean, on the other hand, worked over 2,400 hours.) But if it's widely acknowledged that Americans work more hours than Europeans, it remains a puzzle quite why there's such a large difference. With similar economies and social structures—at least relative to the rest of the world—it would seem that labor patterns should also be alike. Social scientists have been hard-pressed to explain the disparity. Most accounts focus on cultural explanations. The most popular is the notion that Europeans have a fuller appreciation of la dolce vita —the sweet life—the Italian version of the idea that life is to be enjoyed, not endured. Work is a means to an end, not an end in itself. The idea of cultural and religious influences on economic activity isn't new. German sociologist Max Weber wrote The Protestant Ethic and the Spirit of Capitalism nearly a century ago, attributing the rise of capitalist economies to the “Protestant work ethic.” It was an immensely persuasive theory in its time, and derivative explanations have held great sway ever since. “Why do Europeans and Americans differ so much in their attitude toward work and leisure? I can think of two reasons,” opines a recent Time magazine essay. “Broadly speaking, Americans value stuff—SUVs, 7,000-sq.-ft. houses—more than they value time, while for Europeans it's the opposite. Second, ... in the puritanical version of Christianity that has always appealed to Americans, religion comes packaged with the stern message that hard work is good for the soul. Modern Europe has avoided so melancholy a lesson.” “It all comes down to what people feel is important and how they feel about their lives,” argues a September 2003 U.S. News & World Report editorial. “We value more money and more stuff; they value more leisure time. ... We are proud of being busy—it is a virtue; being idle is perceived as a vice.” Economic explanations Economists have always been suspect of such cultural explanations. Standard economic theory assumes that people's preferences are, on average, homogeneous, and that choices depend largely on economic factors. Still, while economists agree that dollars and cents lie behind the work pattern differential, there is little harmony among them as to the right economic explanation. Some economists say work regulations keep Europeans from working longer hours and point favorably to recent European reforms on vacation time. Others argue that greater inequality in the United States motivates workers to try harder to get ahead. Most of these explanations come from the perspective of labor economics and its core belief that social structures and institutions such as unions are the major determinants of labor patterns. But in a recent series of papers and lectures, Edward C. Prescott, senior monetary adviser to the Minneapolis Fed and economist at Arizona State University, looks at the labor supply question through the prism of the growth model—a different perspective altogether—and provides a convincing and remarkably straightforward explanation for the dramatic differences in hours worked. It is an explanation that has far-reaching implications for policymakers—and for anyone else who's ever received a paycheck. According to Prescott, the reason for these large differences in labor supply is not culture. “French, Japanese, and U.S. workers all have similar preferences,” he writes. “The French are not better at enjoying leisure. The Japanese are not compulsive savers.” The reason for the wide range in working hours is, in a word, taxes. Europeans supply less labor because there's a much larger wedge in most European countries between what a worker is paid and what that worker actually gets to keep after taxes are taken out. This tax wedge, argues Prescott, distorts the trade-off people make between consumption and leisure by making consumption more expensive. And since people work, ultimately, to earn money to pay for consumption goods, they'll supply less labor if consumption goods become relatively more expensive. The cheaper alternative: leisure. Hello, Riviera. If the concept seems straightforward, its evolution was anything but. Like most ideas that seem obvious in retrospect, the awareness that taxes distort labor markets dramatically and account for major international differences in work patterns came about indirectly and as a revelation to those who happened upon it. The discovery Prescott's discovery about the role of taxes in labor supply variation began, simply enough, in his classroom at the University of Minnesota, where he taught from 1980 to 2003. “I was making up exercises for my students,” he recalled in a recent interview. “I said, 'use this nice little growth model.'” The “nice little model” he presented to his students is the workhorse of modern macroeconomics; it says, mathematically, that a nation's total output (or gross domestic product, GDP) is dependent on three sources: labor, capital and the efficiency (or productivity) with which it merges them to create economic value. The other key part of this standard theory is, in the jargon of economics, a utility function: a formula representing the notion that households try to maximize their happiness by finding the best possible combination of leisure and consumption, given their resources. Prescott wanted his students to become familiar with this model by looking at how it performed in different nations over time, and how key variables—capital endowments, productivity, labor supply—could account for differences among nations in per capita GDP. “I wanted to try to get across the basic ideas and the importance of productivity,” said Prescott. “And then I thought, let's put a few taxes in.” The intuition was far more significant than Prescott suspected, but that became clear only after looking at the relative contributions of capital, productivity and labor. The data, compiled by the United Nations and the Organization for Economic Cooperation and Development, showed that in the mid-1990s among developed countries—the United States, much of Europe and Japan—relative levels of capital differ little and explain just a small portion of the variation in per capita GDP (see adjacent table). “The capital factor is not an important factor in accounting for differences in incomes across the OECD countries,” writes Prescott in his 2002 Richard T. Ely Lecture to the American Economic Association. “[It] contributes at most 8 percent to the differences in income between any of these countries.” Capital, Labor, Productivity and GDP 1993-96 Country Capital/ Output Ratio (1990) Hours worked per Week per Person 15-64 Productivity: GDP per hour Worked; US=100 GDP per Person 15-64; US=100 Germany 2.7 19.3 99 74 France 2.2 17.5 110 74 Italy 2.6 16.5 90 57 Canada na 22.9 89 79 United Kingdom 2.6 22.8 76 67 Japan 2.5 27.0 74 78 United States 2.3 25.9 100 100 Source: Federal Reserve Bank of Minneapolis Research Department Staff Report 321 and Working Paper 618 . Productivity, on the other hand, is very important, at least for some national differences. Japan and the United States, for example, have similar levels of labor and capital, but per capita GDP in Japan is far below that in the United States because its productivity is less than three-quarters that of the United States. But what of European countries like France, Italy and Germany? Why are their levels of per capita GDP so much lower? All these nations have capital endowments comparable to the United States. Their productivity levels also are similar to U.S. rates, or in the case of France, even higher. The data suggest that the differences in wealth are due almost exclusively to the markedly lower number of hours worked in these European countries. Germany, for instance, had a slightly higher capital endowment than the United States and an equal level of productivity, but just 74 percent of the U.S. per capita GDP. The evident reason: Its workers supplied just over 19 hours of labor per week compared to nearly 26 hours a week per American worker. While many believe that cultural differences lead to fewer hours worked in Europe than in the United States, Prescott doubts it. After all, data from the early 1970s show that the French actually worked more hours per week than did Americans at that time. Has French culture changed radically over the last two decades? Probably not: They still like good wine, aged cheese and, inexplicably, Jerry Lewis. Prescott's hunch was that differences in marginal tax rates might explain the differences in labor supplied and thus account for differences in per capita GDP. Enter the tax wedge “What is important is the price of consumption relative to leisure,” Prescott writes in the lecture he gave in April 2003 as he accepted Northwestern University's prestigious Erwin Plein Nemmers Prize in Economics. “And it is determined by the consumption tax rate and the labor income tax rate.” (See the lecture, “ Why Do Americans Work So Much More Than Europeans? ”) By introducing these taxes into the growth model, and making standard microeconomic assumptions, Prescott derived what he calls “the key equilibrium relation.” 1 It's a mathematical formula for labor supply that says workers will supply labor dependent on, among other things, their preference for consumption now over consumption later (spend or save?), their preference for leisure relative to consumption (play or work?) and the effective tax rate. Holding the first two variables fixed and looking empirically at different national tax rates enables Prescott to see if tax differences can account, fully or partially, for variations in labor hours supplied. Estimating the effective tax rates in these countries was, in itself, a major accounting exercise. Consumption taxes include value-added taxes, sales taxes, excise taxes and property taxes. Labor is subject to both income taxes and Social Security taxes. For each nation under consideration, Prescott and his students crunched the numbers, determined a tax rate, plugged it into the formula along with fixed estimates of the other variables, and derived predictions of labor hours supplied per week per worker. How good were the predictions? Dead-on for Germany and the United Kingdom, a bit low for Canada and the United States, and a bit high for the other countries (see table below). Given measurement inaccuracies, the rough nature of the tax-rate estimates and the difficulty of international comparisons, writes Prescott, the model's predictions were “surprisingly close to the actual.” Tax Rates and Labor Supply 1993-96 Country Tax Rate (percent) Actual Hours Worked per Week per Person 15-64 Predicted Hours Worked per Week per Person 15-64 Difference (Predicted Minus Actual) Germany 59 19.3 19.5 0.2 France 59 17.5 19.5 2.0 Italy 64 16.5 18.8 2.3 Canada 52 22.9 21.3 -1.6 United Kingdom 44 22.8 22.8 0.0 Japan 37 27.0 29.0 2.0 United States 40 25.9 24.6 -1.3 Source: “ Why Do Americans Work So Much More Than Europeans ?” Federal Reserve Bank of Minneapolis Research Department Staff Report 321. Here, notes Prescott, “the important observation is that the low labor supplies in Germany, France and Italy are due to high tax rates. In these countries if someone works more and produces 100 additional euros of output, that individual gets to consume only 40 euros of additional consumption and pays directly or indirectly 60 euros in taxes.” Put in such stark terms, it seems obvious that many Europeans might opt to work less, while Americans and Japanese, taxed more lightly, would be keen to put in extra hours. Confirmation and implications Prescott found further confirmation for his hypothesis when he looked at tax rates and labor supply in the early 1970s (see table below). While his model's predictions of labor hours supplied diverge from the actual in several cases—Italy and Japan, in particular—Prescott observes that “when European and U.S. tax rates were comparable, European and U.S. labor supplies were roughly equal.” Tax Rates and Labor Supply 1970-74 Country Tax Rate (percent) Actual Hours Worked per Week per Person 15-64 Predicted Hours Worked per Week per Person 15-64 Difference (Predicted Minus Actual) Germany 52 24.6 24.6 0.0 France 49 24.4 25.4 1.0 Italy 41 19.2 28.3 9.1 Canada 44 22.2 25.6 3.4 United Kingdom 45 25.9 24.0 -1.9 Japan 25 29.8 35.8 6.0 United States 40 23.5 26.4 2.9 Source: “ Why Do Americans Work So Much More Than Europeans ?” Federal Reserve Bank of Minneapolis Research Department Staff Report 321. As for the outliers, Italy and Japan, Prescott suggests that other factors may be significant. In Italy, cartels may have played a role in depressing labor supply below its predicted value. In Japan, significant measurement errors in actual hours worked could account for the overly high prediction by the model. And what seems another anomaly is very likely an indirect confirmation of the importance of marginal tax rates on labor supply, according to Prescott. In the United States, actual hours worked per person increased by 10 percent from the 1970s to the 1990s, though the marginal tax rate remained at 40 percent. Prescott argues that U.S. tax reforms in the 1980s changed the effective marginal tax faced by married couples—dropping the rate in half for the second earner's income—even though it remained nominally at 40 percent. “In the 1993-96 [period],” he writes, “the marginal income tax on the labor income associated with switching between a one-earner and a two-earner household is only 20 percent, not 40 percent.” The issue warrants more attention, he says, and indeed, his colleagues Larry Jones, Rodolfo Manuelli and Ellen McGrattan have recently released a paper on this exact question. (See “ Wives at Work .”) On the whole, Prescott states, the results show that “people are remarkably similar across countries” and not only for these relatively prosperous and homogeneous nations, but for Chile, Mexico and Argentina, as well, where other economists have found similar relationships. “Apparently, idiosyncratic preference differences average out and result in the [representative] household having almost identical preferences across countries.” The policy implications are enormous for high-tax countries. If France were to lower its effective tax rate from 60 percent to 40 percent, estimates Prescott, its people would work more (taking 6.6 percent less leisure) and—remember their high productivity?—would generate considerably more output. Tax revenues wouldn't diminish, because the 40 percent rate would be levied on a higher base. And overall French “welfare gains,” as economists put it, would increase nearly 20 percent. In the United States, reducing marginal tax rates would have a more modest impact, according to the model: A 10 percent rate reduction would produce a 7 percent welfare gain. But even in the United States, Prescott's findings have huge implications for the viability of the Social Security system. (See “ Shrinking a deadweight loss .”) Foreign affairs In recent months, Prescott has traveled widely, presenting his findings not only to American audiences but to economists and policymakers in London, Berlin, Toulouse, Tokyo and elsewhere overseas. And in fact, says Prescott, Europeans tend to be more receptive than Americans. “The economists there understand that there is a problem,” he said after returning from France in mid-September. “I got some excellent suggestions when I presented the paper, the best so far.” But at all venues, he observes, the common denominator is surprise. Prescott is the first to admit that he, too, thought the results were startling, unexpected. “I find it remarkable that virtually all of the large difference in labor supply between France and the United States is due to differences in tax systems,” he writes in his Ely lecture. “I expected institutional constraints on the operation of labor markets and the nature of the unemployment benefit system to be more important.” Moreover, he concedes that cultural explanations might carry the day in a few settings. “Scandinavians seem to be a little bit different,” he said recently, referring to research by Richard Rogerson, an economist at Arizona State University. “My theory is when one of those Swedes looks at you when you're not working, it's pretty intimidating.” More seriously, he allows that in small, homogeneous cultures, social pressures can be quite strong. But even in large, heterogeneous nations, tax wedges don't always tell the whole story, according to Prescott. “Taxes are not the only reason that the labor factors differ,” says Prescott's Ely lecture. Unemployment benefits and housing subsidies—not taxes—distorted labor mobility in the United Kingdom between the first and second World Wars, contributing significantly to that country's interwar depression. New Deal policies supporting cartels in America's heavy industries distorted wages and employment in the last half of the 1930s, contributing to the depth and duration of the Great Depression in the United States. Similarly, cartels in 1970s Italy may have suppressed employment there. Prescott relies on work by University of California, Los Angeles economists Harold Cole and Lee Ohanian in making these conjectures. Still, while taxes aren't the all-powerful explanatory factor for all nations and eras, Prescott contends that in major developed countries in the time period under consideration, the labor supply impact of tax wedges is a powerful and undeniable fact. Other academics As befits the work of any prominent scholar, Prescott's theory has attracted close academic scrutiny—beyond the initial reaction of surprise—from both adherents and critics. In one recent paper, Peter Lindert, an economist at the University of California, Davis, refers to Prescott's study as dependent upon “a theoretical model heavily laden with assumptions. It is educated, intelligent, plausible fiction—but fiction nonetheless.” On the other hand (as Lindert points out) Prescott's model and findings are cited quite favorably by Nobel Laureate Robert Lucas in his 2003 presidential address to the American Economic Association. Lindert calls for empirical tests. Steven Davis at the University of Chicago Graduate School of Business and Magnus Henrekson of the Stockholm School of Economics oblige with a careful econometric analysis of the impact of labor income and consumption taxes on employment and work activity. In their study of rich countries in the mid-1990s, they find that a 12.8 percentage point difference in tax rates is associated with 122 fewer market work hours per adult per year and nearly a 5 percentage point decrease in employment—population ratios—an indirect affirmation of Prescott's theory. A very different perspective was presented earlier this year in a series of lectures by British economist Richard Layard, co-director of the Centre for Economic Performance at the London School of Economics. Layard takes issue with GDP itself as a satisfactory measure of human welfare—or utility, as Jeremy Bentham and subsequent economists have termed it—noting that “happiness has not increased, despite huge increases in living standards.” To summarize a lengthy argument, Layard's idea is that a tax wedge on labor income could actually increase utility by decreasing a sort of pollution: overwork brought on by the inherent human desire to do better than our peers, regardless of our absolute level of income. Keeping up with the Joneses, in other words, leads to overwork, ill health and unhappiness—rivalry distorts the leisure/labor decision. Appropriate public policy should diminish this pollution by taxing it. “In an efficient economy,” Layard writes, “there will be substantial levels of corrective taxation ... 60 percent would not seem inappropriate, and that is in fact the typical level of marginal taxation in Europe—if you allow for direct and indirect taxes.” Prescott responds Prescott's reactions to these ideas vary widely. Sitting in his seventh-floor office at the Minneapolis Fed, he reads through the first pages of Lindert's paper, then drops it on his desk. “It doesn't seem to be coherent,” he says. Davis and Henrekson's study, on the other hand, intrigues him. That might seem predictable given its broad support of Prescott's findings, but Davis and Henrekson employ a technique Prescott generally scorns: statistical regression. “Progress, don't regress,” he says with a smile, quoting the slogan featured prominently on his Internet home page. Regardless of their method, Prescott is drawn to the findings and has invited Davis to Minneapolis to get a closer look at their work. But Prescott's response to Layard's argument—more complete and nuanced—conveys a sense of Prescott himself. He begins by summarizing Layard's case in a phrase: “I'm happy if I have a lot more income—than you,” he says, grinning and quite aware that he does. As to the overwork such rivalry might cause, “that just says there's a consumption externality.” Then he conveys the concept with a story. “I always tried to create a positive externality in Pittsburgh for my neighbors who had these beautiful lawns,” he jokes of his grad school days at Carnegie Mellon University. “By my having a messy lawn, their lawns looked so much better. I mowed it, but I didn't do much else with my lawn. And it gave me utility to see them happier.” He tells the story with a verbal wink, acknowledging silently that his Pittsburgh yard care externality may well have been less than zero. The conspiratorial smile changes to professorial zeal as he begins to dissect Layard's reasoning: “Suppose everybody cares about relative consumption as well as own consumption. You work out the equilibrium, it's not Pareto optimal. Let's deal with the case where everybody enters symmetrically. So it's simple to make the ordering. Well, you can make everybody better off by just putting a tax on consumption so that they work less. That's a very standard model. Now what would be the empirical evidence for and against that?” In under five minutes, Prescott has crystallized an argument, communicated it to a visitor in plain language and personal anecdote, then converted it to the idiom of economics and laid out steps for its confirmation or refutation. It's vintage Prescott: analytically brilliant, unexpectedly funny and several beats ahead of everyone else. That last bit is the essence of a conversation with the economist. When you ask him a question, it sometimes seems that his reply is off-topic; then it dawns on you that Ed Prescott is answering the question you should have asked. A pattern of surprise Prescott's willingness to entertain alternatives, to listen to critics, to incorporate the unexpected is deeply characteristic of his work. That flexibility is, in fact, the paradoxical outcome of a rigid research discipline. In setting model parameters, for instance, or reporting research results, “the investigator has no degrees of freedom,” he says. “You have to tie your hands and if there's a deviation from your predictions, you report it. You can speculate on why, but you've got to be totally honest.” Intellectual honesty also means allowing findings to modify, even subvert initial hypotheses. It happens frequently, says Prescott. Much of the work for which he's best known—theories on time inconsistency, real business cycles, the equity premium and growth theory—has been developed in an ongoing process of research and revelation. “When I work out the implications, I'm quite often surprised: The findings change my views quite dramatically,” he says. “When I did the real business cycles work with Finn Kydland, I was certain that monetary shocks were the reason the economy fluctuated with the business cycles. Our findings were just the opposite. When I did some work with Rajnish Mehra on the equity premium puzzle, I was certain that the reason for the high historical difference in the return on equity relative to debt was just a premium for bearing aggregate, nondiversifiable risk. We found it wasn't.” For time inconsistency and the impact of taxes on labor supply, as well, surprise has been an intrinsic part of the process. Future direction As striking as his labor supply findings are—and though many aspects of it remain unresolved—Prescott senses that the big theoretical questions in economic growth lie elsewhere, and he is now turning his attention to them. “I think I've had my say on labor supply,” he concludes. In his Ely lecture, he lays out three sources of economic growth: capital, labor and productivity. The first two are important in understanding why some nations remain poor while others prosper, but the central question, contends Prescott, is what determines productivity? “Given productivity, our macro models are great,” he says. “But we treat it as exogenous. We've got to have a better understanding of mapping between policies and productivity.” In other words, what can governments do to enhance productivity? Prescott's main candidates are efficient financial markets, competition among producers and trading clubs. And currently, the last is his major focus. “What is a trading club?” he asks rhetorically. “Well, first, free movement of goods between the member states. But it's much, much more than that. ...” Prescott continues at length, with a discourse ranging from Toyota factories in Wales to trade among the U.S. states in the 19th century. He speaks quickly, and as he does there is a sense that each research question he asks leads him to a dozen more, each more interesting than the last. He will travel soon to Warsaw and then Bogotá to explore these ideas with other economists and policymakers. “It's going to be fascinating to see what's happening in Poland,” he remarks. In Colombia, “the president is trying to do some good things there, and we have to go down and help out.” He's not a policymaker himself. “I leave that to other people,” he says. “I'm no good at it. My comparative advantage is working out implications of theory.” And in so doing, it seems there is just one constraint: Even for Ed Prescott, a scholar who understands labor supply dynamics as well as anyone on earth, there are only 24 hours in a day. “Time,” observes the economist, “is the most valuable resource.” 1 The two assumptions: (1) that people decide between leisure and consumption based on their relative prices, at the margin, and (2) that in a competitive market, wages are equal to their marginal product of labor. The “key equilibrium relation” also depends on the share of a nation's output due to capital. Top of document Advanced Search Glossary See also: Shrinking a deadweight loss