The Decline of Drudgery and the Paradox of Hard Work
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.
The authors are thankful, without implicating, for comments by seminar participants at the University of Colorado at Boulder and the University of Michigan, for comments received during visits to the Board of Governors of the Federal Reserve System, Brown University, the Federal Reserve Bank of Atlanta, the Federal Reserve Bank of Philadelphia, the Federal Reserve Bank of Richmond and McMaster University, and also for comments and suggestions by Martin Boileau, Mike Elsby, Brian Jacob, Alessandro Peri, and Jeff Smith. All errors are the authors' own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.