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Relative concerns at the workplace: on the design of the firm as a social space

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  • Walter Hyll

    (Halle Institute for Economic Research
    Danube University Krems)

Abstract

This paper analyzes firm organization when social comparisons pervade the setting. We consider a firm employing two types of workers associated with different earnings. We assume that inter-group comparisons impinge significantly on the workers’ sense of wellbeing and on their behavior. Thereby we allow both relative deprivation as well as relative satisfaction sensed from (un)favorable income comparisons to coworkers to affect an individual’s utility and, in turn, skill acquisition. The consideration of relative concerns has several implications for the firm. We find that, next to the skill distribution and the composition of the workforce, output and labor productivity depend on the social environment.

Suggested Citation

  • Walter Hyll, 2018. "Relative concerns at the workplace: on the design of the firm as a social space," Journal of Evolutionary Economics, Springer, vol. 28(2), pages 245-264, April.
    • Handle: RePEc:spr:joevec:v:28:y:2018:i:2:d:10.1007_s00191-017-0535-3
    DOI: 10.1007/s00191-017-0535-3
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    More about this item

    Keywords

    Social comparisons; Optimal mix of workers; Relative concerns; Relative satisfaction; Relative deprivation; Internal organization of firms;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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