Behavioural Labour Economics: Advances and Future Directions

54 Pages Posted: 28 Jun 2014

See all articles by Thomas J. Dohmen

Thomas J. Dohmen

Institute for the Study of Labor (IZA); Maastricht University - Business Investment Research Center (BIRC)

Abstract

In the past decades, behavioural economics has become an influential and important field of economics. Interest in behavioural economics derives from unease with standard economic models that are based on restrictive assumptions, which confine the nature of human motivation. Although Adam Smith, the founding father of modern economics, had highlighted the multitude of psychological motives that drive human behaviour, and despite the fact that many influential economists thereafter believed in tenets of modern behavioural economics, the homo economicus assumption became prevalent, until this construct was challenged by compelling evidence on social, cognitive and emotional factors that drive decision-making and social interaction.Since human interaction is germane to labour markets, one would expect behavioural economics to be highly relevant for labour economics. This paper gauges whether and how behavioural economics has left its mark on labour economics, considers the timing and structure of this development, and contemplates its future impact on labour economics.

Keywords: behavioural economics, labour economics, behavioural labour economics

JEL Classification: J00, J01, D03

Suggested Citation

Dohmen, Thomas, Behavioural Labour Economics: Advances and Future Directions. IZA Discussion Paper No. 8263. Available at SSRN: https://ssrn.com/abstract=2460206

Thomas Dohmen (Contact Author)

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Maastricht University - Business Investment Research Center (BIRC) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31-43-388 3832 (Phone)
+31-43-388 4856 (Fax)

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