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Let’s think about an economically sound way to measure the value of leisure. To keep this simple, we’ll just think about the value of leisure to people who could work but who decide to stay home. Also, we won’t think about how much actual workers value their free time, or how much children and retirees value their time.In a standard supply and demand labour model, firms “demand” labour while workers “supply” labour. Let’s think about a labour market that is in equilibrium, with a wage of $20 per hour and with 14 million individuals working out of a total of 16 million working-age individuals.According to this simplified model of the economy, some workers would work if the wage were higher, but at the current wage, they’d rather stay home and watch reruns of Seinfeld or (don’t let this be you!) Coronation Street. For the workers who are right on the margin between working and not working, what would their wage be if wages rose ever so slightly and they went to work?
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