AGGREGATION WITH SEQUENTIAL INDIVISIBLE AND CONTINUOUS LABOR SUPPLY DECISIONS AND AN INFORMAL SECTOR

  • Aleksandar VASILEV Independent Researcher, Bulgaria

Abstract

The purpose of this paper is to explore the problem of non-convex labor supply decision in an economy with both discrete and continuous labor decisions. In contrast to the setup in Vasilev (2016a), here each household faces a sequential labor market choice - an indivisible labor supply choice in the market sector, and conditional on non-working in the official sector, a divisible hours choice in the informal sector. We show how lotteries as in Rogerson (1988) can again be used to convexify consumption sets, and aggregate over individual preferences. With a mix of sequential discrete and continuous labor supply decisions, aggregate disutility of non-market work becomes separable from market work, and the elasticity of the latter increases from unity to infinity.

References

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Published
2017-12-07
How to Cite
VASILEV, Aleksandar. AGGREGATION WITH SEQUENTIAL INDIVISIBLE AND CONTINUOUS LABOR SUPPLY DECISIONS AND AN INFORMAL SECTOR. Theoretical and Practical Research in the Economic Fields, [S.l.], v. 8, n. 2, p. 144-148, dec. 2017. ISSN 2068-7710. Available at: <https://journals.aserspublishing.eu/tpref/article/view/1562>. Date accessed: 15 nov. 2018. doi: https://doi.org/10.14505//tpref.v8.2(16).06.