Journal of Evolutionary Economics

, Volume 28, Issue 2, pp 245–264 | Cite as

Relative concerns at the workplace: on the design of the firm as a social space

Regular Article
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Abstract

This paper analyzes firm organization when social comparisons pervade the setting. We consider a firm employing two types of workers associated with different earnings. We assume that inter-group comparisons impinge significantly on the workers’ sense of wellbeing and on their behavior. Thereby we allow both relative deprivation as well as relative satisfaction sensed from (un)favorable income comparisons to coworkers to affect an individual’s utility and, in turn, skill acquisition. The consideration of relative concerns has several implications for the firm. We find that, next to the skill distribution and the composition of the workforce, output and labor productivity depend on the social environment.

Keywords

Social comparisons Optimal mix of workers Relative concerns Relative satisfaction Relative deprivation Internal organization of firms 

JEL classification

D01 D21 J22 J24 M54 

Notes

Acknowledgements

The author thanks Luigi Orsenigo and three anonymous reviewers for their insightful comments and suggestions that have lead to several improvements in the paper.

Funding

This study received no funding.

Compliance with ethical standards

Conflict of interest

The author declares that he has no conflict of interest.

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Copyright information

© Springer-Verlag GmbH Germany 2017

Authors and Affiliations

  1. 1.Halle Institute for Economic ResearchHalleGermany
  2. 2.Danube University KremsKremsAustria

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