Advanced Search
MyIDEAS: Login to save this paper or follow this series

Relative Consumption, Working Time, and Trade Unions

Contents:

Author Info

  • Laszlo Goerke
  • Inga Hillesheim

Abstract

Status considerations with respect to consumption give rise to negative externalities because individuals do not take into account that their decisions affect the relative consumption position of others. Further, status concerns create incentives for excessive labour supply in competitive markets. We show that trade unions which are unable to internalise the externality can nevertheless mitigate the resulting distortion. The reason is that wages above the market clearing level are only feasible if people work less and, therefore, fewer hours than in a competitive market. Accordingly, the theoretical model establishes that trade unions can have a welfare-enhancing role in a world with relative consumption effects.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2013/wp-cesifo-2013-07/cesifo1_wp4318.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4318.

as in new window
Length:
Date of creation: 2013
Date of revision:
Handle: RePEc:ces:ceswps:_4318

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: externality; hours of work; relative consumption; trade union;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2005. "How much do we care about absolute versus relative income and consumption?," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 56(3), pages 405-421, March.
  2. Choudhary, M. Ali & Levine, Paul, 2006. "Idle worship," Economics Letters, Elsevier, Elsevier, vol. 90(1), pages 77-83, January.
  3. Senik, Claudia, 2005. "Ambition and jealousy. Income Interactions in the "old" Europe versus The "New" Europe and the United States," CEPREMAP Working Papers (Docweb), CEPREMAP 0510, CEPREMAP.
  4. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, American Economic Association, vol. 75(1), pages 101-16, March.
  5. Sven Wehke, 2007. "Union Wages, Hours of Work and the Effectiveness of Partial Coordination Agreements," FEMM Working Papers 07019, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  6. Sara J. Solnick & David Hemenway, 2005. "Are Positional Concerns Stronger in Some Domains than in Others?," American Economic Review, American Economic Association, American Economic Association, vol. 95(2), pages 147-151, May.
  7. Olof Johansson-Stenman & Fredrik Carlsson & Dinky Daruvala, 2002. "Measuring Future Grandparents" Preferences for Equality and Relative Standing," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(479), pages 362-383, April.
  8. Jørgen Drud Hansen & Hassan Molana & Catia Montagna & Jørgen Ulff-Møller Nielsen, 2010. "Work Hours, Social Value of Leisure and Globalisation," Dundee Discussion Papers in Economics, Economic Studies, University of Dundee 229, Economic Studies, University of Dundee.
  9. Giacomo Corneo, 2000. "The Efficient Side of Progressive Income Taxation," CESifo Working Paper Series 364, CESifo Group Munich.
  10. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 46(1), pages 95-144, March.
  11. Giulia Faggio & Stephen Nickell, 2006. "Patterns of work across the OECD," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19853, London School of Economics and Political Science, LSE Library.
  12. Boskin, Michael J & Sheshinski, Eytan, 1978. "Optimal Redistributive Taxation when Individual Welfare Depends upon Relative Income," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 92(4), pages 589-601, November.
  13. Fredrik Carlsson & Olof Johansson-Stenman & Peter Martinsson, 2007. "Do You Enjoy Having More than Others? Survey Evidence of Positional Goods," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 74(296), pages 586-598, November.
  14. Clark, Andrew E. & Oswald, Andrew J., 1998. "Comparison-concave utility and following behaviour in social and economic settings," Journal of Public Economics, Elsevier, Elsevier, vol. 70(1), pages 133-155, October.
  15. Mujcic, Redzo & Frijters, Paul, 2010. "Economic Choices and Status: Measuring Preferences for Income Rank," IZA Discussion Papers 5157, Institute for the Study of Labor (IZA).
  16. Calmfors, Lars, 1985. "Work sharing, employment and wages," European Economic Review, Elsevier, Elsevier, vol. 27(3), pages 293-309.
  17. Oh, Seung-Yun & Park, Yongjin & Bowles, Samuel, 2012. "Veblen effects, political representation, and the reduction in working time over the 20th century," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 83(2), pages 218-242.
  18. Stefan Dodds, 2012. "Redistributive taxation with heterogeneous relative consumption concerns," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 45(1), pages 220-246, February.
  19. Hart, Robert A. & Moutos, Thomas, 1991. "Efficient bargains in the context of recent labour market experience and policy," European Journal of Political Economy, Elsevier, Elsevier, vol. 7(2), pages 169-181, July.
  20. Andrews, M J & Simmons, R, 2001. "Friday May Never Be the Same Again: Some Results on Work-Sharing from Union-Firm Bargaining Models," Scottish Journal of Political Economy, Scottish Economic Society, Scottish Economic Society, vol. 48(5), pages 488-516, November.
  21. Michael Huberman & Chris Minns, 2005. "Hours of Work in Old and New Worlds: The Long View, 1870-2000," The Institute for International Integration Studies Discussion Paper Series, IIIS iiisdp95, IIIS.
  22. Francisco Alvarez-Cuadrado, 2006. "Envy, Leisure, And Restrictions On Working Hours," Departmental Working Papers, McGill University, Department of Economics 2006-01, McGill University, Department of Economics.
  23. Inga Hillesheim & Mario Mechtel, 2012. "How Much Do Others Matter? Explaining Positional Concerns for Different Goods and Personal Characteristics," IAAEU Discussion Papers, Institute of Labour Law and Industrial Relations in the European Union (IAAEU) 201210, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  24. Booth, Alison & Ravallion, Martin, 1993. "Employment and Length of the Working Week in a Unionized Economy in which Hours of Work Influence Productivity," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 69(207), pages 428-36, December.
  25. Harald Uhlig & Lars Ljungqvist, 2000. "Tax Policy and Aggregate Demand Management under Catching Up with the Joneses," American Economic Review, American Economic Association, American Economic Association, vol. 90(3), pages 356-366, June.
  26. Huberman, Michael & Minns, Chris, 2007. "The times they are not changin': Days and hours of work in Old and New Worlds, 1870-2000," Explorations in Economic History, Elsevier, Elsevier, vol. 44(4), pages 538-567, October.
  27. T. Berger & F. Heylen, 2009. "Differences in hours worked in the OECD: institutions or fiscal policies?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium, Ghent University, Faculty of Economics and Business Administration 09/601, Ghent University, Faculty of Economics and Business Administration.
  28. FitzRoy, Felix R. & Funke, Michael & Nolan, Michael A., 2002. "Working time, taxation and unemployment in general equilibrium," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(2), pages 333-344, June.
  29. Orsetta Causa, 2009. "The policy determinants of hours worked across OECD countries," OECD Journal: Economic Studies, OECD Publishing, OECD Publishing, vol. 2009(1), pages 1-39.
  30. Ireland, Norman J., 1998. "Status-seeking, income taxation and efficiency," Journal of Public Economics, Elsevier, Elsevier, vol. 70(1), pages 99-113, October.
  31. Persson, Mats, 1995. " Why Are Taxes So High in Egalitarian Societies?," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 97(4), pages 569-80, December.
  32. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 37(3), pages 373-383, November.
  33. Booth, Alison & Schiantarelli, Fabio, 1987. "The Employment Effects of a Shorter Working Week," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 54(214), pages 237-48, May.
  34. Toke Aidt & Zafiris Tzannatos, 2002. "Unions and Collective Bargaining : Economic Effects in a Global Environment," World Bank Publications, The World Bank, number 15241, August.
  35. Goerke, Laszlo & Pannenberg, Markus, 2013. "Keeping up with the Joneses: Income Comparisons and Labour Supply," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order, Verein für Socialpolitik / German Economic Association 80033, Verein für Socialpolitik / German Economic Association.
  36. Hansen, Jørgen Drud & Nielsen, Jørgen Ulff-Møller & Molana, Hassan & Montagna, Catia, 2010. "Work Hours, Social Value of Leisure and Globalisation," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2010-08, Scottish Institute for Research in Economics (SIRE).
  37. Oswald, Andrew J, 1979. "Wage Determination in an Economy with Many Trade Unions," Oxford Economic Papers, Oxford University Press, vol. 31(3), pages 369-85, November.
  38. Hillesheim, Inga & Mechtel, Mario, 2013. "How much do others matter? Explaining positional concerns for different goods and personal characteristics," Journal of Economic Psychology, Elsevier, Elsevier, vol. 34(C), pages 61-77.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_4318. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.