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Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right?

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Author Info
Samuel Bowles () (University of Massachusetts Amherst)
Yongjin Park () (Connecticut College)
Abstract

We investigate Veblen effects on work hours, namely the way that a desire to emulate the consumption standards of the rich induces longer work hours among the rest. Consistent with our model of these asymmetric social comparisons, greater inequality predicts longer work hours in ten OECD countries over the period 1963-1998. The country fixed effects estimates of the impact of inequality on hours are large, robust, and cannot be explained by conventional incentive effects. In the presence of Veblen effects, a social welfare optimum cannot be implemented by a flat tax on consumption but may be accomplished by progressive consumption taxes.

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Paper provided by University of Massachusetts Amherst, Department of Economics in its series Working Papers with number 2004-14.

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Date of creation: Nov 2004
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Handle: RePEc:ums:papers:2004-14

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Related research
Keywords: Interdependent utility; relative income; social comparisons; inequality; emulation; Veblen effects; work hours;

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Find related papers by JEL classification:
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D62 - Microeconomics - - Welfare Economics - - - Externalities
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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