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Non-pecuniary Work Incentive and Labor Supply

Y. Hossein Farzin () and Ken-Ichi Akao

No 190910, Working Papers from University of California, Davis, Department of Agricultural and Resource Economics

Abstract: Recognizing that people value employment not only to earn income to satisfy their consumption needs, but also as a means to gain socio-psychological (nonpecuniary) benefits, we show that once nonpecuniary work incentives are incorporated into standard labor supply theory, (i) the wage rate under-estimates (over-estimates) the true value of nonwork/leisure time when work has nonpecuniary benefits (costs), (ii) nonpecuniary benefits can be a substitute for monetary wages as work incentives, (iii) at very low wage rates, work can become a net source of utility, and (iii) the shape of labor supply curve differs from standard theory. We also identify conditions under which a greater nonpecuniary work incentive generates a larger individual labor supply, and examine the effects of non-wage income on labor supply both for paid and voluntary work.

Keywords: Demand and Price Analysis; Labor and Human Capital (search for similar items in EconPapers)
Pages: 33
Date: 2005-09
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Working Paper: Non-pecuniary Work Incentive and Labor Supply (2006) Downloads
Working Paper: Non-pecuniary Work Incentive and Labor Supply (2006) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucdavw:190910

DOI: 10.22004/ag.econ.190910

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