Value of Work: Bargaining, Job-Satisfaction, and Taxation in a Simple GE Model

Felix FitzRoy and Michael A. Nolan ()
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Michael A. Nolan: University of Hull

No 1760, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Job-satisfaction as a component of workers' utility has been strangely neglected, with work usually regarded as reducing utility and the benefits of leisure. This is contradicted by many empirical studies showing that unemployment is a major cause of unhappiness, even when income is controlled for. Here we develop a simple model where job-satisfaction is non-contractible but can be included in extended collective bargaining when workers participate in management, but employment is still chosen to maximise profit. Including taxation to fund unemployment benefits and public goods, we show that switching from traditional bargaining over wages to extended (but still second-best) bargaining can generate a Pareto welfare improvement.

Keywords: job-satisfaction; bargaining; unemployment (search for similar items in EconPapers)
JEL-codes: J28 J52 J65 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2005-09
New Economics Papers: this item is included in nep-lab and nep-pbe
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