Non-pecuniary Value of Employment and Individual Labor Supply
Recognizing that people value employment not only to earn income to satisfy their consumption needs but also as a means of community involvement that provides socio-psychological (non-pecuniary) benefits, we show that once the non-pecuniary benefits of employment are incorporated in the standard individual’s utility function, then at very low income levels employment can be a source of utility, inducing individuals to supply labor to the extent possible. We also show the conditions under which a greater non-pecuniary effect of employment generates a larger individual labor supply.
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