Tuesday, July 20, 2021

The Decline of Drudgery and the Paradox of Hard Work

The Decline of Drudgery and the Paradox of Hard Work. Brendan Epstein & Miles S. Kimball. NBER Working Paper, 29041, July 2021. DOI 10.3386/w29041

Abstract: We develop a theory that focuses on the general equilibrium and long-run macroeconomic consequences of trends in job utility—the process benefits and costs of work. Given secular increases in job utility, work hours per population can remain approximately constant over time even if the income effect of higher wages on labor supply exceeds the substitution effect. In addition, secular improvements in job utility can be substantial relative to welfare gains from ordinary technological progress. These two implications are connected by an equation flowing from optimal hours choices: improvements in job utility that have a significant effect on labor supply tend to have large welfare effects.

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