Relative Absence Concerns, Positional Consumption Preferences and Working Hours

Laszlo Goerke

A chapter in Power and Responsibility, 2023, pp 47-74 from Springer

Abstract: Abstract Positional income or consumption preferences can induce individuals to work too much to enhance their relative standing. Empirical evidence suggests that people are also characterised by relative considerations with respect to sickness-related absence from work. We analyse theoretically how relative consumption and absence concerns interact. Although relative absence concerns may mitigate the consequences of relative consumption preferences, the market outcome will never be efficient. Hence, we derive the income tax rate and the level of sick pay which induce efficient behaviour as the market outcome.

Keywords: Externality; Income tax; Market outcome; Pareto-efficiency; Relative absence; Relative consumption; Sick pay (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-23015-8_4

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DOI: 10.1007/978-3-031-23015-8_4

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