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Revisiting the neoclassical theory of labour supply – Disutility of labour, working hours, and happiness

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  • Steffen Rätzel

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

Abstract

In empirical analyses, employment status has a substantial influence on individual wellbeing. People without work are consistently less happy, even after controlling for income. This result seems to contradict the standard theory assumption of labour disutility. In this paper, we analyze the impact of working time on happiness. The results show distinct positive utility effects caused by employment and working time. Happiness correlates positively with hours worked. However, there is an inverse U-shaped correlation – excessive hours reverse the relationship. Additionally, the results show the importance of exogenously given deviations of working time from the individually preferred labour supply. These discrepancies reduce well-being and counterbalance the positive effects of work.

Suggested Citation

  • Steffen Rätzel, 2009. "Revisiting the neoclassical theory of labour supply – Disutility of labour, working hours, and happiness," FEMM Working Papers 09005, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:09005
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    File URL: http://www.ww.uni-magdeburg.de/fwwdeka/femm/a2009_Dateien/2009_05.pdf
    File Function: First version, 2009
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    References listed on IDEAS

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    1. Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2003. "The Macroeconomics of Happiness," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 809-827, November.
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    5. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
    6. AlisonL. Booth & JanC. vanOurs, 2008. "Job Satisfaction and Family Happiness: The Part-Time Work Puzzle," Economic Journal, Royal Economic Society, vol. 118(526), pages 77-99, February.
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    Cited by:

    1. Collewet M.M.F. & Grip A. de & Koning J. de, 2015. "Conspicuous work : peer working time, labour supply, and happiness for male workers," Research Memorandum 012, Maastricht University, Graduate School of Business and Economics (GSBE).

    More about this item

    Keywords

    Labour Supply; Working Hours; Happiness; Life Satisfaction;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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