Envy, leisure, and restrictions on working hours

Francisco Alvarez‐Cuadrado
Authors registered in the RePEc Author Service: Francisco Alvarez-Cuadrado ()

Canadian Journal of Economics/Revue canadienne d'économique, 2007, vol. 40, issue 4, 1286-1310

Abstract: Abstract. We present a simple model of capital accumulation where agents care about their consumption relative to the consumption of other members of society, ‘envy,’ In this context we quantify the extent of the distortions and welfare costs associated with envy. Under conservative estimates of envy we find that the implied welfare losses are substantial. We explore the implications of alternative policy arrangements designed to minimize the effects of the consumption externality. Our results suggest that if the optimal tax policy is not politically feasible, restrictions on working hours provide an alternative tool to induce a market outcome that resembles the efficient allocation achieved under a benevolent central planner. JEL classification: D62, H21 On présente un modèle d'accumulation où les agents sont affectés par leur niveau de consommation relativement à celui des autres membres de la société– il y a ≪envie≫. On quantifie jusqu'à quel point il y a distorsions et pertes de bien‐être associées à l'envie. Des évaluations conservatrices montrent que les pertes de bien‐être sont substantielles. On explore ce que ces résultats impliquent pour la définition de politiques de rechange visant à minimiser les effets de cet effet externe de consommation. On suggère que si la politique fiscale optimale n'est pas politiquement acceptable, des restrictions sur les heures de travail pourraient être un instrument de rechange qui pourrait produire des résultats de marché qui ressemblent à l'allocation efficace qui découlerait des actions d'un planificateur central bienveillant.

Date: 2007
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Citations: View citations in EconPapers (28)

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https://doi.org/10.1111/j.1365-2966.2007.00452.x

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Journal Article: Envy, leisure, and restrictions on working hours (2007)
Working Paper: ENVY, LEISURE, AND RESTRICTIONS ON WORKING HOURS (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:canjec:v:40:y:2007:i:4:p:1286-1310

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