Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right

Samuel Bowles () and Yongjin Park ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: We investigate the importance of Veblen effects on work hours, namely the manner in which a desire to emulate the consumption standards of the rich influences individuals’ allocation of time between labor and leisure. Our model of the choice of work hours captures Veblen effects by taking account of the influence of the consumption of the well-to-do on the marginal utility of consumption by the less well-off. The main result is that work hours are increasing in the degree of income inequality. We use data on work hours of manufacturing employees in ten countries over the period 1963-1998, along with three different measures of income inequality to explore this hypothesis. Using both OLS and country-fixed-effects estimates, we find that greater inequality predicts longer work hours. Its effects are large, and estimates are robust across a variety of specifications. Additional evidence suggests that while greater inequality may induce longer hours for conventional incentive reasons, this mechanism does not account for our results. We show that in the presence of Veblen effects, a social welfare optimum cannot be implemented by a flat tax on consumption but may be accomplished by more complicated (progressive) consumption taxes or by subsidizing the leisure of the rich.

Keywords: Interdependent utility; relative income; emulation; Veblen effects; work hours (search for similar items in EconPapers)
JEL-codes: D31 D62 H23 J22 (search for similar items in EconPapers)
Date: 2003-11
New Economics Papers: this item is included in nep-cdm, nep-ltv, nep-mic and nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://repec.deps.unisi.it/quaderni/409.pdf (application/pdf)

Related works:
Journal Article: Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right? (2005)
Working Paper: Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right? (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:409

Access Statistics for this paper

More papers in Department of Economics University of Siena from Department of Economics, University of Siena Contact information at EDIRC.
Bibliographic data for series maintained by Fabrizio Becatti ().