INTRODUCTION: There is an important political debate in Europe over whether Europeans would be better off economically if they moved toward a U.S.-style economic model, most importantly in their labor markets. The conventional wisdom, in both academic circles and the media, is that they would, and there is transatlantic consensus that Europe needs more labor market flexibility, including increased latitude of employers to fire employees, less regulation of business, lower payroll taxes, reduced public pensions, unemployment compensation and other payments, lower wages and benefits attached to employment, and a reduced influence of unions. Yet, the empirical evidence for this view has been weak.
But aside from the economic and political implications, there are potentially large costs to the environment if European countries were to move to a U.S.-style economic model. Europe currently consumes about half as much energy per person as the United States, and this would change if Europeans worked as many hours as U.S. workers do.
This paper looks at the potential environmental effects of such a change. If the countries of "Old Europe" were to adopt U.S. practices and increase annual work hours to American levels, they could consume some 30 percent more energy than they do at present. Not only could that impact fuel prices worldwide, but the resulting carbon emissions would make it far more difficult for the EU to meet its commitments to the Kyoto Protocol.
As the economies of developing countries grow, those nations will look to the U.S. and European labor models. Worldwide energy patterns, therefore, will be dependent on which model developing countries choose in the next few decades. If, by 2050, the world works as many hours as do Americans it could consume 15-30 percent more energy than it would following Europe. The additional carbon emissions could result in 1 to 2 degrees Celsius in extra global warming.
Although it is not high on the political agenda at this time, there is the possibility of the reverse outcome: that the United States moves more in the direction of Europe, which would reduce energy consumption. For example, if the United States had adopted European standards for work hours, U.S. carbon dioxide emissions in 2000 would have been 7 percent lower than its actual 1990 emissions—the negotiated goal for the U.S. in meeting Kyoto. This paper will look at these relationships between work hours and energy consumption.
