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In Austria, the law is forcing employers to pay 14 wages instead of the usual 12 (one per month) per year for almost every employee. More specifically, employees get a 13th payment around July called "Urlaubsgeld" or Vacation money and a 14th payment around December called "Weihnachtsgeld" or Christmas money. Thus, if you compare monthly payments with its neighbour germany, where you can but usually do not get 13th and 14th payment, it seems like austrians are getting less money paid than germans, but the difference is that Austrians get theirs 14x and Germans 12x. Also, in Austria, the 13th and 14th payment are significantly less taxed than the usual twelve.

Now I have no idea what are the reasons for that, but what I was thinking about was the following. It is a fact that most Austrians are going on Vacation in December/January and July/August and use their 13th and 14th salary for doing so. And as we all know, when money from economy x get spent abroad (which is what happens when people go to vacation), economy x is becoming weaker. Isn't it then the case, that Austrian economy is weakening itself by organizing two big payments during vacation times by encouraging Austrians to spend money abroad?

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  • $\begingroup$ well I guess not every Austrian gets abroad for vacation, some of them will spend in on the Austrian territory. Another thing you can think about is the efficiency of workers: maybe this stimulates productivity where you can usually see a season fall off (see among others: "Efficiency Wage Theories: A Partial Evaluation" written by Katz (1986) $\endgroup$ – Alexis L. May 12 '16 at 22:38
  • $\begingroup$ So, two times a year, there are no Austrians left in Austria? They have all left to go on holiday? Or perhaps they spend a significant amount on buying christmas-gifts (boosting the economy) or saving it? (Also boosting the economy?) Your question is too broad. $\endgroup$ – Thorst May 13 '16 at 6:45
  • $\begingroup$ @Lasse This is about whether that 14-wages-system is motivating austrians to spend money abroad since they get their biggest wage chunks during vacation times $\endgroup$ – Acroneos May 13 '16 at 9:36
  • $\begingroup$ @AlexisL. Statistik Austria, the federal statistics organization of the country is telling that approximately 67 % of Austrians are going abroad for vacation every year at least once. statistik.at/wcm/idc/… $\endgroup$ – Acroneos May 13 '16 at 10:09
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    $\begingroup$ The first of several implied questions here is whether Austrians behave in accordance with the permanent income hypothesis. Only if the answer to that is no, or not entirely, do there arise questions about the pattern of extra spending in holiday periods and its effects.. $\endgroup$ – Adam Bailey May 13 '16 at 10:17

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