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Do the Economies of Specialization Justify the Work Ethics? A Further Examination of Buchanan's Hypothesis

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  • Yew-Kwang Ng

    (Department of Economics, Monash University)

Abstract

Ng & Ng (2003) provide a qualified support for Buchanan's (1991, 1994) hypothesis on work ethics by showing that a decrease in preference for leisure (a higher work ethics) by an individual benefits her trading partners by improving the terms of trade of the latter. Moreover, the higher the degree of the economies of specialization, the larger is this beneficial effect. Using a similar model, the present paper shows that a simultaneous artificial decrease in preference for leisure by all individuals decreases intrinsic utility evaluated at the original preference. However, using a more realistic model allowing for both home and firm/market production developed by Ng & Zhang (2005), a stronger support is provided for Buchanan's hypothesis as a shift in preference by everyone from leisure to market goods produced under increasing returns and average-cost pricing increases utility even if evaluated in accordance with the original preference.

Suggested Citation

  • Yew-Kwang Ng, 2006. "Do the Economies of Specialization Justify the Work Ethics? A Further Examination of Buchanan's Hypothesis," Annals of Economics and Finance, Society for AEF, vol. 7(2), pages 385-403, November.
    • Handle: RePEc:cuf:journl:y:2006:v:7:i:2:p:385-403
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    References listed on IDEAS

    as
    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Sverre Grepperud & Pål Andreas Pedersen, 2001. "The Crowding-out of Work Ethics," Studies in Economics 0102, School of Economics, University of Kent.
    3. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
    4. Yang, Xiaokai & Heijdra, Ben J, 1993. "Monopolistic Competition and Optimum Product Diversity: Comment," American Economic Review, American Economic Association, vol. 83(1), pages 295-301, March.
    5. Yew-Kwang Ng, 2009. "Do the Economies of Specialization Justify the Work Ethics? An Examination of Buchanan’s Hypothesis," Palgrave Macmillan Books, in: Increasing Returns and Economic Efficiency, chapter 10, pages 122-153, Palgrave Macmillan.
    6. Sun, Guang-Zhen & Yang, Xiaokai & Zhou, Lin, 2004. "General equilibria in large economies with endogenous structure of division of labor," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 237-256, October.
    7. Dingsheng Zhang & Yew-Kwang Ng, 2004. "Average-cost Pricing, Increasing Returns, and Optimal Output in a Model With Home and Market Production," Econometric Society 2004 Australasian Meetings 322, Econometric Society.
    8. Yew-Kwang Ng & Heling Shi & Guang-Zhen Sun (ed.), 2003. "The Economics of E-Commerce and Networking Decisions," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-4039-3837-4, March.
    9. Locay, Luis, 1990. "Economic Development and the Division of Production between Households and Markets," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 965-982, October.
    10. Yew-Kwang Ng, 2003. "From preference to happiness: Towards a more complete welfare economics," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 20(2), pages 307-350, March.
    11. Dixit, Avinash K & Stiglitz, Joseph E, 1993. "Monopolistic Competition and Optimum Product Diversity: Reply," American Economic Review, American Economic Association, vol. 83(1), pages 302-304, March.
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    More about this item

    Keywords

    Work; Leisure; Increasing returns; Specialization; Ethics; Buchanan;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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