Data spanning from 1900 to 2000 for several countries indicates a strong association between falling income inequality and reduced working hours. Nations that experienced the largest decreases in the income share of their wealthiest citizens, like the Netherlands and Sweden, also saw the most substantial drops in average work hours.

Reduction in Inequality and Decrease in Work Hours

The data presented in Figure 3.18 for ten countries over the twentieth century confirms the prediction of the Veblen effect hypothesis. It reveals a positive association where a larger share of total income going to the wealthiest 1% of the population corresponds with longer average annual working hours for the general populace.

Higher Income Share for the Richest 1% is Associated with Longer Work Hours

Data from the end of the 20th century shows that a modest increase in average work hours in both the United States and Sweden was associated with a simultaneous rise in income inequality in these nations. This finding provides a data-backed explanation for the reversal of the long-term trend of declining work hours in these two countries.

Rising Inequality and Increased Work Hours in the US and Sweden (Late 20th Century)

Figure 3.18 is a graph that plots data from ten countries throughout the twentieth century. It displays the average annual work hours on its vertical axis and the income fraction received by the richest 1% of households on its horizontal axis, which uses a ratio scale.

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This is a 2012 academic paper by S. Y. Oh, Y. Park, and S. Bowles, published in the *Journal of Economic Behavior and Organization*. The study, titled ‘Veblen effects, political representation, and the reduction in working time over the 20th century’, is the source for the data and analysis in Figure 3.18, which links higher income inequality to longer working hours.

Oh, Park, and Bowles (2012) Study on Veblen Effects and Work Hours

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

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