Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right?

Samuel Bowles () and Yongjin Park ()
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Samuel Bowles: University of Massachusetts Amherst

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

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.

Keywords: Interdependent utility; relative income; social comparisons; inequality; emulation; Veblen effects; work hours (search for similar items in EconPapers)
JEL-codes: D31 D62 H23 J22 (search for similar items in EconPapers)
Date: 2004-11
New Economics Papers: this item is included in nep-cbe, nep-ltv, nep-pbe and nep-pke
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Citations: View citations in EconPapers (3)

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Journal Article: Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right? (2005)
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