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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

    () (Connecticut College)

Abstract

This paper investigates whether one’s effort to keep up with the Joneses has any effect on labor supply behavior. We provide a simple model and empirical evidence that labor supply decisions of married women are influenced by relative as well as absolute income of their husbands. We find, after controlling for husbands’ absolute income and other individual characteristics, that married women are more likely to be in labor force when their husbands’ relative income is low. Results are robust across various settings and measures of relative income and the size of the effect is economically meaningful. We also show that income inequality of reference group of husbands in age-regional cross sections can be a predictor of their wives’ labor supply.

Suggested Citation

  • Yongjin Park, 2005. "The Second Paycheck to Keep Up With the Joneses: Relative Income Concerns and Labor Market Decisions of Married Women," UMASS Amherst Economics Working Papers 2005-10, University of Massachusetts Amherst, Department of Economics.
  • Handle: RePEc:ums:papers:2005-10
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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

    Keywords

    Interdependent utility; relative income; social comparisons; inequality; emulation; labor market participation of married women.;

    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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