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Divergence in Work-Leisure Choices Amidst Rising Living Standards
Limitations of the Ceteris Paribus Assumption in Work-Leisure Models
Simple economic models for analyzing work-leisure choices are built on the ceteris paribus ('other things equal') assumption. This simplification is a key limitation, as it intentionally omits important real-world variables like cultural norms and political changes. Consequently, while the model provides a foundational understanding, it cannot fully account for historical and cross-country variations in working hours where these omitted factors play a significant role.
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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
Related
Model of Constrained Choice (Decision Making Under Scarcity)
Hypothesis: Income Inequality Explains Cross-Country Differences in Work Hours
Time Use Studies
Explaining Cross-Country Work-Hour Differences via Wages vs. Preferences
Limitations of the Ceteris Paribus Assumption in Work-Leisure Models
Learn After
An economist uses a simple model that only considers how wage changes affect an individual's choice between consumption and free time. The model predicts that as a country's average wage rises, its citizens will work fewer hours. However, when comparing two countries with similar histories of strong wage growth, the economist finds that working hours decreased significantly in one country but remained high in the other. Which of the following best explains the model's failure to predict the outcome in both countries?