Holidays: driver of growth or brake on the economy?

Ahead of the Nauryz celebrations, when Kazakhstanis can expect five days off, the question becomes particularly relevant: how do public holidays affect the economy?

Holidays are traditionally perceived as a time for rest, family gatherings, meeting friends, and attending public events. For economists, the question of how national holidays impact a nation’s welfare remains a subject of debate. In a new study by Habibullah et al. (2025), data from 101 countries were analyzed to determine where the line between “beneficial” rest and economic losses can be drawn.

Existing literature does not provide a clear conclusion on the impact of holidays on economic growth, highlighting its context-dependent nature.

On the one hand, theoretical models suggest that increasing the workforce or working hours should raise production levels. However, empirical studies show that prolonged increases in working time can have negative consequences: fatigue, higher risk of workplace accidents, health deterioration, and reduced social cohesion. At the same time, leisure and public holidays can positively affect the economy through several mechanisms:

• The “happy-productive worker” hypothesis, formulated by Isham et al. (2021): Rest allows employees to recover, reduces professional stress and the risk of workplace accidents, which in the long term increases labor productivity.
• Consumption stimulation: Holidays are often accompanied by higher household spending on food, gifts, and leisure. For example, Ramasamy et al. (2008) show that one additional holiday in Hong Kong increases quarterly per capita consumption by approximately USD 213.
• Tourism and innovation development: Time allocated to recreation can stimulate creativity and innovative activity (Boikos et al., 2022), indirectly boosting productivity and living standards.

However, these effects are not unlimited. Min et al. (2016) note that although leisure-driven tourism initially stimulates growth, its marginal contribution diminishes as countries reach higher levels of economic development. Empirical evidence confirms the non-linear nature of leisure effects. Cui et al. (2019) analyzed data from 21 OECD countries and found that moderate leisure positively affects productivity, while excessive leisure reduces working time and overall output. Similarly, Wang et al. (2022) identified an inverted U-shaped relationship between leisure time and productivity in China’s manufacturing sector: productivity increases with leisure up to 4.7 hours per day, but declines beyond that. This effect is largely explained by improvements in employees’ physical health and subjective well-being. Thus, existing research confirms that the impact of rest and holidays on economic growth is non-linear.

The key finding of the study was the confirmation of a non-linear relationship between the number of holidays and economic growth. The analysis showed that economic growth initially accelerates with an increasing number of holidays, reaches a peak, and then begins to decline.

This pattern is explained by the balance between consumption benefits and the opportunity costs of lost working time. In the early stage, the “consumption effect” dominates, but after the optimum is exceeded, the reduction in productive capacity outweighs the benefits of holiday spending.

Analysis of data from 101 countries using various models revealed:

• Linear models: Robust regression with Newey–West correction for heteroskedasticity and Huber’s M-estimation identified a weak linear relationship between the number of holidays and GDP growth.
• Non-linear model: In line with theoretical assumptions by Barrera and Garrido (2017) and prior empirical evidence, an inverted U-shaped relationship was confirmed: an increase in holidays initially promotes economic growth but begins to have a negative effect beyond a certain threshold.
• Quantile regression: The results further confirmed the non-linear relationship, showing it is most pronounced in countries with medium and high growth rates. In countries in the lower quantiles (with low or negative growth), holidays had no statistically significant effect. Conversely, in higher-growth countries, the optimal number of holidays increased.

Quantile regression analysis showed that the optimal number of public holidays varies depending on the level of economic growth:

• Around 9 days – for countries with moderate growth (30–40th percentiles);
• Around 10 days – for countries with average growth (50–60th percentiles);
• Up to 12 days – for countries with high growth (80–90th percentiles).

It is likely that economies with stronger and more sustained growth are better able to absorb the costs associated with additional holidays without compromising overall growth.

In Kazakhstan, the number of public holidays varies from year to year: between 2020 and 2026, it ranges from 13 to 16 days. The main changes are due to religious holidays such as Christmas (January 7) and Kurban Ait (May 27 in 2026), which is determined according to the lunar calendar. Since these days are not moved, when they coincide with weekends, the total number of days off might decrease.

For comparison:

• Russia – about 13–14 holidays per year, with the notable feature of long New Year holidays in January.
• Kyrgyzstan – formally fixed long holiday periods: New Year (January 1–7) and May (May 1–8), totaling about 13–14 non-working days. An interesting practice is the “make-up” of holidays: in 2025, some official holidays (e.g., April 7, November 7–8) retained holiday status but were working days to compensate for the long holiday periods in January and May. In addition, in Kyrgyzstan, the working day before a holiday is shortened by one hour.
• USA – around 11 federal holidays, usually distributed individually throughout the year, without forming long continuous breaks. An interesting case is Inauguration Day, granted to federal employees in Washington, D.C., every four years on January 20.
• Netherlands – Liberation Day (Bevrijdingsdag, May 5) is a unique holiday officially observed as a day off only once every five years. In 2025, the holiday marked the 80th anniversary of the liberation at the end of World War II, but in subsequent years up to 2045 it will mostly fall on weekends and not provide an additional day off.
• Austria – on average, 13 public holidays per year, some of which may fall on weekends (e.g., effectively about 10 days off in 2026). A key feature is strict trading rules: shopping centres, stores and supermarkets are closed on holidays, and often only open until noon before Christmas. Moreover, trade is closed on Sundays year-round, and Saturdays have shortened working hours. This affects the structure and timing of consumption throughout the year.

Holidays and days off serve as a significant instrument of economic policy, extending beyond their social or cultural relevance. They are not inherently detrimental to GDP. When properly calibrated, they can be part of a strategy to boost productivity through human capital and stimulate domestic demand.

*This article was prepared using AI tools: NotebookLM and ChatGPT.

Work Calendar for 2026. ConsultantPlus. https://www.consultant.ru/law/ref/calendar/proizvodstvennye/2026/ 

Kyrgyzstan - Production Calendar for 2026. https://www.calend.ru/work/kirgizstan/

Federal Holidays: 2026. US Office of Personnel Management. https://www.opm.gov/policy-data-oversight/pay-leave/federal-holidays/#url=2026 

Legal Holidays: Holidays 2026. Austrian Consulate General. https://www.bmeia.gv.at/en/austrian-consulate-general-new-york/news/legal-holidays

Netherlands Marks 80 Years of Freedom on Liberation Day. (2025, May 5). The Netherlands and Host Nation. https://www.netherlandsandyou.nl/web/nl-host-nation/w/netherlands-marks-80-years-of-freedom-on-liberation-day