Less work and higher tax can raise wellbeing

Jim Yongtao Jin*, Felix R FitzRoy

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Worktime has been falling slowly though real wages have risen dramatically. We show that in a general equilibrium model with CES utility and production functions, worktime falls with real wages if and only if the elasticity of substitution between consumption and leisure is less than that between capital and labour, but always rises with labour's income share and concerns with relative income. While a falling labour share may not reduce worktime due to market inflexibility, stronger income comparison increases inefficient overwork. Hence, more flexibility, higher income taxes and a basic income are needed to reduce working hours and raise social welfare.
Original languageEnglish
Number of pages17
JournalManchester School
VolumeEarly View
Early online date8 May 2024
Publication statusE-pub ahead of print - 8 May 2024


  • Basic income
  • Labour income share
  • Relative income
  • Working hours


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