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Evaluating Competing Economic Explanations for Work Hours
An economist observes that the average workweek in Country A is significantly longer than in Country B. Two competing hypotheses are proposed to explain this difference:
- Hypothesis 1: In Country A, there is high income inequality and highly visible consumption of luxury goods by the wealthy. This creates a social pressure on others to work more to afford a similar lifestyle. In Country B, income inequality is lower, and such social pressure is weaker.
- Hypothesis 2: Country A has much lower income tax rates on overtime pay compared to Country B. This creates a stronger direct financial incentive for individuals to work longer hours in Country A.
A new study is published. It finds that salaried employees in Country A, who are not eligible for overtime pay, still work significantly more hours and report lower satisfaction with their work-life balance compared to salaried employees in Country B.
Based on this new evidence, which hypothesis offers a more compelling explanation for the difference in work hours? Justify your reasoning.
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Science
Economy
CORE Econ
Social Science
Empirical Science
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
Evaluation in Bloom's Taxonomy
Cognitive Psychology
Psychology
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