Much Work in a Leisure-Intensive Economy: Why Keynes Was Both Right and Wrong

Dimitry Rtischev

Gakushuin Economic Papers, 2025, vol. 61, issue 4, 267-282

Abstract: A simple analytical model is used to examine how rising labor productivity reduces working time in an economy of agents who are both workers and consumers. The model endogenizes the feedback from leisure to employment due to the demand for leisure-complementing goods by consumers. It is found that the rate at which rising labor productivity is translated into leisure is not nearly as fast as Keynes had predicted under the assumption that leisure is solely a residual outcome of economic activity rather than also a stimulant of demand and employment. Keynes was right to forecast a leisure-intensive economy, but wrong to neglect the consequences of leisure for work.

Keywords: leisure time; labor productivity; technological innovation; employment (search for similar items in EconPapers)
JEL-codes: J22 J24 O12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:abc:gakuep:61-4-3

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