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Relative consumption, working time, and trade unions

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  • Goerke, Laszlo
  • Hillesheim, Inga

Abstract

Status considerations with respect to consumption give rise to negative externalities because individuals do not take into account that their decisions affect the relative consumption position of others. Further, status concerns create incentives for excessive labour supply in competitive markets. We show that trade unions which are unable to internalise the externality can nevertheless mitigate the resulting distortion. The reason is that wages above the market clearing level are only feasible if people work less and, therefore, fewer hours than in a competitive market. Accordingly, the theoretical model establishes that trade unions can have a welfare-enhancing role in a world with relative consumption effects.

Suggested Citation

  • Goerke, Laszlo & Hillesheim, Inga, 2013. "Relative consumption, working time, and trade unions," Labour Economics, Elsevier, vol. 24(C), pages 170-179.
    • Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:170-179
    DOI: 10.1016/j.labeco.2013.08.002
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    2. Marco de Pinto & Jörg Lingens, 2017. "The Impact of Unionization Costs when Firm-selection Matters," IAAEU Discussion Papers 201701, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. Laszlo Goerke & Michael Neugart, 2017. "Social comparisons in Oligopsony," IAAEG Discussion Papers until 2011 201704, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    4. de Pinto Marco & Goerke Laszlo, 2019. "Efficiency Wages in Cournot-Oligopoly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-13, October.
    5. Hansen, Jørgen Drud & Molana, Hassan & Montagna, Catia & Nielsen, Jørgen Ulff-Møller, 2012. "Work hours, social value of leisure and globalisation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(3), pages 317-326.
    6. Laszlo Goerke & Michael Neugart, 2021. "Social preferences, monopsony and government intervention," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(2), pages 864-891, May.
    7. Bilancini, Ennio & Boncinelli, Leonardo, 2019. "Wage inequality, labor income taxes, and the notion of social status," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-35.
    8. Laszlo Goerke, 2016. "Tax Evasion in a Cournot Oligopoly with Endogenous Entry," IAAEG Discussion Papers until 2011 201605, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    9. Achim Kemmerling & Michael Neugart, 2019. "Redistributive pensions in the developing world," Review of Development Economics, Wiley Blackwell, vol. 23(2), pages 702-726, May.
    10. Zwickl, Klara & Disslbacher, Franziska & Stagl, Sigrid, 2016. "Work-sharing for a sustainable economy," Ecological Economics, Elsevier, vol. 121(C), pages 246-253.
    11. Aronsson, Thomas & Mannberg, Andrea, 2015. "Relative consumption of housing: Marginal saving subsidies and income taxes as a second-best policy?," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 439-450.
    12. Laszlo Goerke, 2017. "Tax evasion in a Cournot oligopoly with endogenous entry," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(5), pages 754-779, September.
    13. Sanou Issa, 2021. "Jealousy and Wealth Inequality: The Cases of Heterogeneous Preferences and Elastic Labor Supply," Working Papers hal-03408115, HAL.
    14. Laszlo Goerke, 2020. "Horizontal FDI in a Dynamic Cournot - Oligopoly with Endogenous Entry," IAAEU Discussion Papers 202003, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    15. Makarski, Krzysztof & Tyrowicz, Joanna, 2019. "On welfare effects of increasing retirement age," Journal of Policy Modeling, Elsevier, vol. 41(4), pages 718-746.
    16. Izabela Jonek-Kowalska, 2014. "Employment and Remuneration Trends in Polish Hard Coal Mines in the Context of the Relations Between Boards and Trade Unions," International Journal of Synergy and Research, ToKnowPress, vol. 3(1), pages 27-43.
    17. Klara Zwickl & Franziska Disslbacher & Sigrid Stagl, 2016. "Work-sharing for a Sustainable Economy. WWWforEurope Working Paper No. 111," WIFO Studies, WIFO, number 58684.
    18. Laszlo Goerke & Michael Neugart, 2020. "Thorstein Veblen, Joan Robinson, and George Stigler (probably) never met: Social Preferences, Monopsony, and Government Intervention," IAAEU Discussion Papers 202001, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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    More about this item

    Keywords

    Externality; Hours of work; Relative consumption; Trade union;
    All these keywords.

    JEL classification:

    • D - Microeconomics
    • J - Labor and Demographic Economics
    • J - Labor and Demographic Economics

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