Non-Pecuniary Value of Employment and Natural Resource Extinction

29 Pages Posted: 27 Nov 2005

See all articles by Y. Hossein Farzin

Y. Hossein Farzin

University of California, Davis - Department of Agricultural and Resource Economics; Oxford Centre for the Analysis of Resource Rich Economies (OxCarre)

Ken-Ichi Akao

Waseda University

Date Written: February 2006

Abstract

We assume that people value employment not only to earn income to satisfy their consumption needs but also as a means of community/social involvement that provides socio-psychological (non-pecuniary) benefits. We show that the latter incentive can encourage full employment harvesting resources and explain why poor resource-based communities may exhaust a natural resource in a finite time even if there is a sustainable path of resource consumption available. We show that communities could sustain their natural resources by using outside-the-community employment and economic diversification, but, to be effective, such policies must ensure that the outside wage rate and the initial capital stock are above certain minimum levels, which will be higher the longer these policies are delayed.

Keywords: Non-pecuniary effects, social norm, employment value, resource extinction, sustainability

JEL Classification: E24, O12, O13, Q28

Suggested Citation

Farzin, Y. Hossein and Akao, Ken-Ichi, Non-Pecuniary Value of Employment and Natural Resource Extinction (February 2006). FEEM Working Paper No. 24.2006, Available at SSRN: https://ssrn.com/abstract=854585 or http://dx.doi.org/10.2139/ssrn.854585

Y. Hossein Farzin (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
530-752-7610 (Phone)
530-752-5614 (Fax)

HOME PAGE: http://farzin.ucdavis.edu/

Oxford Centre for the Analysis of Resource Rich Economies (OxCarre) ( email )

University of Oxford, Department of Economics
Manor Road
Oxford, OX1 4AU
United Kingdom

HOME PAGE: http://www.oxcarre.ox.ac.uk

Ken-Ichi Akao

Waseda University ( email )

1-6-1 Nishiwaseda
Shinjuku-ku
Tokyo, 169-8050
Japan

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