Since 1965 the average amount of leisure time for men has increased by 8 hours p
ID: 2495310 • Letter: S
Question
Since 1965 the average amount of leisure time for men has increased by 8 hours per week. that's like an extra 9 weeks of vacation per year. For women the average increase in leisure has been 6 hours per week. Over the same period of time the average wage for men and women has increased.
a.) What does this tell us about the icome elasticity of leisure?
b.) It turns out that the increase in leisure is much larger for low wage men and women than for high wage men and women. What does this tell us about the different income effects for leisure?
c.) Over the same period there has been a widening of the income distribution; that is; "the rich are getting richer", and the poor are not keeping up. However, since leisure is a "good," why is this unfairness in the spread of income mitigated by the change in leisure time?
Explanation / Answer
Income elasticity of leisure is positive. Which means leisure has increased so does the income.
b. Income-Substitution Effect:
"For a worker, there is a choice between work and leisure.
c. Now the poor are getting more leisure time than the rich. So the unfairness in income distribution is mitigated by the change in leisure time.