Less work and higher tax can raise wellbeing
Date
08/05/2024Metadata
Show full item recordAbstract
Worktime has been falling slowly though real wages have risen dramatically. We show that in a general equilibrium model with CES utility and production functions, worktime falls with real wages if and only if the elasticity of substitution between consumption and leisure is less than that between capital and labour, but always rises with labour's income share and concerns with relative income. While a falling labour share may not reduce worktime due to market inflexibility, stronger income comparison increases inefficient overwork. Hence, more flexibility, higher income taxes and a basic income are needed to reduce working hours and raise social welfare.
Citation
Jin , J Y & FitzRoy , F R 2024 , ' Less work and higher tax can raise wellbeing ' , Manchester School , vol. Early View . https://doi.org/10.1111/manc.12481
Publication
Manchester School
Status
Peer reviewed
ISSN
1463-6786Type
Journal article
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