Where Exactly Are Those Lazy Southern Europeans, Anyway?

The northern eurozone countries are facing the prospect of coming up with massive amounts of additional funds to avert the collapse of Europe's financial sector. There have been some hints from various sources that a major and decisive agreement will be reached this weekend... though if the eurozone crisis has taught us anything, it is that one should never underestimate the power of European policy-makers to dither and delay beyond all reasonable expectations.

At any rate, lots of people (primarily but not exclusively in northern Europe) are very angry about the massive cost of fixing the eurozone mess. Understandably so. But unfortunately, much of that anger has been specifically directed at those lazy, shiftless, irresponsible southern Europeans that are seen to have gotten the eurozone into this mess to begin with. It's not difficult to find such finger-pointing expressed in the statements of prominent European officials, or in commentary on blogs and news sites.

I've repeatedly argued that I strongly disagree with this placement of blame; the eurozone crisis was fundamentally caused by the massive flow of capital from the north to the south of Europe that was bound to happen once the euro was adopted, and the specific behavior of individual governments in southern Europe had little to do with it. But I realize that this is a relatively abstract economic argument -- albeit one with substantial theoretical and empirical support. Stories of impersonal capital flows somehow don't address the gut feeling that lots of people have that southern Europeans really are less hard-working and responsible than northern Europeans, and that those laid-back southern attitudes must have caused the crisis.

I understand that gut feeling. That's part of what people like about southern Europe, after all -- things there do tend to move more slowly than in the north. But sometimes that gets confused with inefficiency and laziness, and turned into a moral judgment.

For some people, such judgments can be traced back to their own experiences... such as that day on vacation somewhere in southern Europe when they suffered through terrible service at a restaurant, got food poisoning, found that every pharmacy was closed for an extended lunch break in the middle of the afternoon, and then attempted navigate an incredible amount of paperwork and government bureaucracy to register a simple complaint. (No, I'm not speaking from personal experience at all. Why do you ask?)

In other cases the moral judgment of the south is probably more abstract and theoretical, and is simply following in the tradition of Weber's Protestant Ethic and the Spirit of Capitalism. Suspicion of the character of southern Europeans is not at all new.

But either way, being the economist that I am, I've been looking for some data to provide more insight into what lies behind this notion that southern Europeans are indeed a bunch of lazy free-loaders. Here's what I've found so far. Note that each table shows four northern eurozone countries and then four southern eurozone countries. Data is from the OECD.

Southern Europeans tend to work more hours each year than northern Europeans. But perhaps this is made up for in the north by greater participation in the labor force...

No, with the exception of Italy, it appears that the percentage of the population that is an active part of the labor force is generally similar to labor force participation rates in northern Europe. Germany appears to compensate for the few hours that its people work by having more people working in the first place.

So let's turn to the productivity of that labor. We know that labor in southern Europe has always been less productive than in northern Europe (for the past few centuries, anyway)... but have they been falling even further behind?

Labor productivity grew incredibly rapidly in Greece in the years leading up to the crisis. Even much-maligned Portugal enjoyed improvements in labor productivity roughly equal to northern Europe. Interestingly, it was Spain and Italy -- two southern European countries that did not run particularly large budget deficits (Spain even ran a budget surplus), and for which capital flows from northern Europe financed private investment rather than government spending -- that lagged in productivity growth. This again calls into question the common notion that large budget deficits in southern Europe are to blame for the crisis.

Now let's look at the social welfare system. In addition to being lazy, southern Europeans are accused of simply living off the state. So here's the amount of social welfare spending per capita:

Northern European countries give their people considerably more state assistance than do southern European countries. Greece and Portugal give by far the least, though we must recognize that incomes in those countries are much lower in general. But even Italy provides less social support to its citizens on a per capita basis than any of the northern European countries, and in 2007 Italy's per capita GDP was about the same as France's.

Just to be sure, though, let's take a look at a specific kind of public assistance expressed as a percentage of GDP: state pensions.

With this measure Italy does indeed appear to spend more on pensions than northern European countries. Of course, Italy also has one of the oldest populations in the world on average, which might explain that difference. Regardless, pensions in the rest of southern Europe are not particularly generous, even relative to income, when compared to northern Europe.

Putting it all together, it's hard to see much empirical support in this data for the notion that southern Europeans are a bunch of lazy free-loaders. That's not to say that there aren't obvious cases of gross inefficiencies in southern European countries -- of course there are. And there are probably other types of data that I haven't thought of that should be examined as well. Feel free to offer suggestions. I've focused on the types of data that, to me, most obviously and directly speak to the common criticisms of southern Europeans, but perhaps I've missed something.

Alternatively, maybe there really isn't a systematic difference in how hard-working, responsible, or self-reliant southern and northern Europeans are. After all, it is also possible to find plenty of examples of opaque government bureaucracies, entrenched unions, and extremely generous state assistance in the northern eurozone countries. So the next time someone asserts that southern European irresponsibility is what lead to this crisis, I would simply ask to see the data they have to support that claim.