A Comparison of the American and German Work Place: Why Americans Have More Incentive to Work Harder

Abstract

We argue that Americans work harder and more diligently compared to Germans, due to the vastly different incentive systems that exist in the two countries. Many such differences reflect the different economic systems. The United States economic system reflect its capitalistic roots while Germany favors the social democratic system that creates an emphasis on equality throughout their labor markets. As a statistical fact, Germans work fewer hours than Americans. The main reason for this is Germany's stronger preference for leisure. Reflecting these differences in country preferences is the relatively high tax rate and low overtime premiums compared to America. In addition, other policies such as their education and training systems, government programs, and use of bonus systems all contribute to our understanding for why Americans work longer hours compared to Germans.