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The Second Paycheck to Keep Up with the Joneses: Relative Income Concerns and Labor Market Decisions of Married Women

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  • Yongjin Park

    () (Economics Department, Connecticut College, 270 Mohegan Avenue, New London, CT 06320, USA.)

Abstract

This paper provides a simple model and an empirical test of the effect of interpersonal income comparisons on labor supply. By focusing on the relative income of a full-time working man and its effect on the wife’s labor supply decision, we examine the role of relative income in labor supply decisions while avoiding the endogeneity problem that plagues the relative income–labor supply connection. The results show that the relative income of husbands plays an important role in the labor supply decisions of married women. The effects are economically meaningful and robust across various measures of relative income and reference groups.

Suggested Citation

  • Yongjin Park, 2010. "The Second Paycheck to Keep Up with the Joneses: Relative Income Concerns and Labor Market Decisions of Married Women," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(2), pages 255-276, Spring.
  • Handle: RePEc:pal:easeco:v:36:y:2010:i:2:p:255-276
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    Cited by:

    1. Goerke, Laszlo & Neugart, Michael, 2017. "Social comparisons in oligopsony," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 196-209.
    2. Alpaslan Akay & Lisa Andersson & Peter Martinsson & Haileselassie Medhin, 2014. "Positional Concerns among the Poor: Does Reference Group Matter? Evidence from Survey Experiments," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 23(5), pages 673-699.
    3. repec:bla:worlde:v:40:y:2017:i:9:p:1708-1717 is not listed on IDEAS
    4. Laszlo Goerke & Michael Neugart, 2017. "Social comparisons in Oligopsony," IAAEG Discussion Papers until 2011 201704, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    5. Boris Gershman, 2014. "The two sides of envy," Journal of Economic Growth, Springer, vol. 19(4), pages 407-438, December.
    6. Maurice Schiff, 2015. "Habit, Prisoner’s Dilemma and Americans’ Welfare Cost of Working Much More than Europeans," RSCAS Working Papers 2015/02, European University Institute.
    7. 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 80033, Verein für Socialpolitik / German Economic Association.
    8. 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, vol. 83(2), pages 218-242.
    9. Eduardo Pérez-Asenjo, 2011. "If happiness is relative, against whom do we compare ourselves? Implications for labour supply," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1411-1442, October.

    More about this item

    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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