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.

Figure 3.18: Inequality and Work Hours (1900-2000)

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

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.

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This hypothesis, derived from the Veblen effect, proposes that national differences in average working hours can be attributed to varying levels of income inequality. The theory predicts that in societies with a larger wealth gap, people tend to work more to keep up with the high consumption standards set by the rich. Conversely, in countries with lower inequality, there is less pressure for such emulative work, leading to shorter average work hours.

Hypothesis: Income Inequality Explains Cross-Country Differences in 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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