Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105736
Authors: 
Bowles, Samuel
Park, Yongjin
Year of Publication: 
2004
Series/Report no.: 
Working Paper, University of Massachusetts, Department of Economics 2004-14
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.
Subjects: 
Interdependent utility
relative income
social comparisons
inequality
emulation
Veblen effects
work hours
JEL: 
H23
D31
D62
J22
Document Type: 
Working Paper

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