Beware of Workaholics: Household Preferences and Individual Equilibrium Utility

Abstract

This paper analyzes the effects of sociological changes in the form of a shift of influence within two-member households participating in labor and product markets. The most striking effects occur when household members differ in individual preferences and enjoy positive leisure-dependent externalities. For instance, a global sociological change where the "workaholic" member becomes more influential in each working class household can render the working class worse off. A binding restriction on the number of hours an individual is allowed to work can benefit all workers.

Keywords: household behavior, general equilibrium, externalities, labor supply

JEL Classification: D10, D50, J22