Non-pecuniary Work Incentive and Labor Supply
AbstractRecognizing that people value employment not only to earn income to satisfy their consumption needs, but also as a means to gain socio-psychological (nonpecuniary) benefits, we show that once nonpecuniary work incentives are incorporated into standard labor supply theory, (i) the wage rate under-estimates (over-estimates) the true value of nonwork/leisure time when work has nonpecuniary benefits (costs), (ii) nonpecuniary benefits can be a substitute for monetary wages as work incentives, (iii) at very low wage rates, work can become a net source of utility, and (iii) the shape of labor supply curve differs from standard theory. We also identify conditions under which a greater nonpecuniary work incentive generates a larger individual labor supply, and examine the effects of non-wage income on labor supply both for paid and voluntary work.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.21.
Date of creation: Feb 2006
Date of revision:
Nonpecuniary incentives; Labor supply; Non-wage income; Voluntary work;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
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