Non-pecuniary Work Incentive and Labor Supply
Y. Hossein Farzin () and
No 2006.21, Working Papers from Fondazione Eni Enrico Mattei
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: Nonpecuniary incentives; Labor supply; Non-wage income; Voluntary work (search for similar items in EconPapers)
JEL-codes: D62 J22 I31 (search for similar items in EconPapers)
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Working Paper: Non-pecuniary Work Incentive and Labor Supply (2006)
Working Paper: Non-pecuniary Work Incentive and Labor Supply (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2006.21
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