Competing to belong and working to pay for it: a socioeconomic model of the link between productivity and work-life balance

Abstract

I model and simulate an increasingly productive labor economy in which heterogeneous agents choose how much to work, how much to consume, and where to belong. The agents like to belong to “clubs” (e.g., neighborhoods, schools, workplaces) which are formed, quality-ranked, and priced endogenously. I examine the effect of productivity gains, paid out either through wage hikes or universal income grants, on club prices, leisure time, and consumption. I find that income grants are more prone than wage hikes to be dissipated in the bidding to join the “better” clubs. The findings imply that socioeconomic competition channeled through market institutions may hinder the translation of productivity growth into better work-life balance.