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Why Do People Work So Hard?

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  • Paul Scanlon

    (Trinity College Dublin)

Abstract

Labor hours tend to fall as an economy develops, but subsequently tend to stabilize. I present a model that explains long-run trends in labor supply by the interaction of two opposing forces: a rising real wage, which lowers labor supply, and increasing product variety, which raises it. Both forces arise from the same source---innovation---and on a balanced growth path their interaction can sustain stable labor hours. Calibrating the model over the period 1959-2000, for benchmark parameters it can explain on average 80 percent of the discrepancy between hours predicted by the standard CIES one-good model and the data.

Suggested Citation

  • Paul Scanlon, 2018. "Why Do People Work So Hard?," 2018 Meeting Papers 1206, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:1206
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    References listed on IDEAS

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