Publisher:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft, Kiel, Hamburg
Abstract:
Social comparisons matter for workers' valuation of their wage. The consequences of so- cial comparisons in imperfectly competitive markets are less well understood. We analyze an oligopsonistic model of the labor market where workers derive (dis-) utility from comparing their own wage with wages paid at other firms. As social comparisons become more preva- lent all wages rise, the wage distribution becomes more equal, and employment shifts to high productivity firms. Overall welfare increases.