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Are holidays good or bad for the economy? A cross-national evidence
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Date
2025
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Abstract
The economic implications of public holidays remain inconclusive. Certain studies report that public holidays reduce the available labour supply, leading to diminished firm productivity and, subsequently, lower economic growth. Conversely, other research highlights their stimulative effect, particularly through increased private consumption and demand during holiday periods, which may support growth. This study explores these conflicting outcomes by analysing data from 101 countries. The primary model employs real GDP growth as the response variable, with explanatory variables including the number of public holidays, The analysis incorporates key macroeconomic indicators such as growth in labour productivity, increases in capital stock, tourism development, institutional governance quality, inflows of foreign direct investment, and shifts in urbanization. The initial assessment employs linear estimations through Ordinary Least Squares with heteroskedasticity-consistent standard errors, alongside Robust regression utilizing M-estimation techniques. Both methods reveal a weak linear association between public holidays and growth. We then examine a potential non-linear connection and identify an inverted U-shaped pattern: economic growth initially rises with additional public holidays, up to a certain threshold, after which it begins to decline. To validate these findings, quantile regression is applied. The analysis indicates that the optimal number of public holidays varies by growth quantile: 9 days for the 30th�40th percentiles, 10 days for the 50th�60th, 11 days for the 70th, and 12 days for the 80th�90th percentiles. Our findings recommend that governments identify a balanced number of holidays to maintain stable and sustainable economic performance.
Keywords
Economic growth , Multi-country analysis , Quantile regression , Public holidays , Non-linear relationship
Citation
Habibullah, M. S., Saari, M. Y., Abdul Hamid, B., Abd Rahman, M. D., & Che Rosly, N. E. S. (2025). Are holidays good or bad for the economy? A cross-national evidence from 101 countries. Journal of Human Security, 21(2), 31-46. https://doi.org/10.12924/johs2025.210206
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