Economic Cost of Public Holidays Is Manageable
Research
28.09.2026
ZEW Study on the Impact of Public Holidays on Gross Domestic Product
Public holidays have a measurable but limited effect on economic output in Germany, a new study by ZEW Mannheim shows. Extrapolated over a full year, a single additional public holiday leads to a loss of between 0.055 and 0.28 per cent of gross domestic product (GDP). In the manufacturing sector, months in which a public holiday falls on a Sunday rather than on a weekday exhibit on average around 3 per cent higher revenues per employee and around 2.5 per cent more working hours.
“The loss of a working day measurably reduces economic output, but firms compensate for part of the production loss through overtime and other adjustments. The actual impact is therefore likely to be more moderate than simple extrapolations suggest,” says Dr. Eduard Brüll, researcher in the ZEW “Labour Markets and Social Insurance” Research Unit. “Public holidays do involve economic costs, but these costs are limited and leave room for broader societal considerations.”
Limited but real macroeconomic effects
To assess the macroeconomic significance, the study simulates the macroeconomic effects of an additional working day. Under the assumption that all economic sectors are equally affected, the average effect lies at around 0.28 per cent of GDP. If the effect is limited to the manufacturing sector, a significantly lower value of about 0.06 per cent results. The actual value is likely to lie between these two benchmarks. While public holidays tend to stimulate consumption in some service sectors, such as hospitality, other sectors are directly constrained by reduced working time.
Sunday rest regulations make for a natural experiment
The study relies on a particular feature of German labour law: most types of work are prohibited on Sundays and public holidays. When a public holiday falls on a Sunday, it does not lead to an additional loss of production. This institutional overlap creates a natural experiment that can be used to identify the effect of public holidays on economic activity.
Data
The analysis is based on monthly panel data from the Cost Structure Survey of Manufacturing Establishments conducted by the Federal Statistical Office. The dataset covers all 16 federal states for the period from 2005 to 2019. It provides firm-level information on revenues, employment and working hours, which are aggregated at the federal state and monthly level.
