Beiträge zur Jahrestagung des Vereins für Socialpolitik 2017: Alternative Geld- und Finanzarchitekturen - Session: Labor Contracts and Markets I E05-V1
Social comparisons matter for workers' valuation of their wage. The consequences of so- cial comparisons in imperfectly competitive markets are less well understood. We analyze an oligopsonistic model of the labor market where workers derive (dis-) utility from comparing their own wage with wages paid at other firms. As social comparisons become more preva- lent all wages rise, the wage distribution becomes more equal, and employment shifts to high productivity firms. Overall welfare increases.