Relative concerns at the workplace: on the design of the firm as a social space

Walter Hyll

Journal of Evolutionary Economics, 2018, vol. 28, issue 2, No 3, 245-264

Abstract: Abstract This paper analyzes firm organization when social comparisons pervade the setting. We consider a firm employing two types of workers associated with different earnings. We assume that inter-group comparisons impinge significantly on the workers’ sense of wellbeing and on their behavior. Thereby we allow both relative deprivation as well as relative satisfaction sensed from (un)favorable income comparisons to coworkers to affect an individual’s utility and, in turn, skill acquisition. The consideration of relative concerns has several implications for the firm. We find that, next to the skill distribution and the composition of the workforce, output and labor productivity depend on the social environment.

Keywords: Social comparisons; Optimal mix of workers; Relative concerns; Relative satisfaction; Relative deprivation; Internal organization of firms (search for similar items in EconPapers)
JEL-codes: D01 D21 J22 J24 M54 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s00191-017-0535-3

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