Preferences for work and leisure: is labour supply a function of what workers prefer?

The assumption that utility maximisation determines individual employment outcomes and labour supply is central to neoclassical labour market theory and inspired a whole culture of leisure literature, which links the supply of labour to individual preferences. In this study, we use data from the World and European Value Surveys to test if individual preferences for work vs. leisure are related to employment outcomes. We employ a multilevel logit model to test this proposition on the extensive margin, i.e., the odds for a person to be in employment, and the intensive margin, i.e., the supply of labour (full time vs. part time). We find that there is no relationship between individual preferences and employment odds, neither on the extensive nor on the intensive margin. The effects of average country-level work-leisure-preferences are mixed. Overall, therefore, our study suggests that unemployment is an institutional issue, rather than an outcome of individual preferences.