Now, so much as I don't want to argue the vacation stuff in terms of economic growth, I'm happy to talk in terms of total utility. And if our system has, as I believe, been significantly undervaluing leisure, then LB may be exactly on target when she argues that:
More generally, the question of whether 'compensation' can be increased by mandating paid vacation depends on whether leisure time is worth, in terms of utility, the same amount to the employee as it costs the employer. If workers, on average, think that two weeks of leisure increases their utility by more than employers think it costs them, but transaction costs (cultural factors, whatever) keep them from bargaining for that outcome, then mandating that a part of every worker's compensation consist of paid vacation is going to make everyone better off -- it will literally increase compensation to workers in terms of utility, without injuring employers. A libertarian would probably think it was patronizing to believe that workers and employers are systematically arriving at deals other than the ones that would make them both happiest, but I'm not a libertarian, and in this case I think it's fairly likely that mandating paid vacation would make people better off.
I have, in the past, traded X amount of income for Y amount of vacation, where X was, in absolute terms, worth significantly more, but Y was worth significantly more to me. So this isn't impossible.
As a more general point on all this, the debate on vacation time and compensation basically tracks the debate on the minimum wage. If you believe lower-skilled workers are being systematically undervalued because they have so little bargaining power, you're for things like a raise in the minimum wage, which would create widespread displacement if all these folks were being paid what they were worth, but won't if, as appears likely from the data, they're being paid what companies can get away with paying them. Same too with vacation. If government mandates more vacation time, you may, as Matt thinks, see pay cuts, or it may turn out that most of the folks affected by the change are being compensated so poorly anyway that companies will basically absorb the cost. There's not enough to cut to make cuts worth it. To be clear, I don't think anyone knows if that'll happen, and I don't think it's the relevant issue when deciding whether to support a broad increase in vacation time. But like with a lot of policies, the economic effects here are substantially more uncertain than simple models may indicate.
Oh: And on a related note, could people stop confusing vacation time, which you get a lot of in France, with work rules, which you have a lot of in France? How much vacation someone gets has nothing to do with how easy it is to fire them. If this is really hard for you to wrap your head around, pretend I keep saying "Sweden" or "Norway" rather than France, as both countries have similarly lavish paid leave policies but actually exhibit less job lock than America.
