• Aleksandar VASILEV Independent Researcher, Bulgaria


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.


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[3] Vasilev, A. 2015a. Welfare gains from the adoption of proportional taxation in a general-equilibrium model with a grey economy: the case of Bulgaria’s 2008 flat tax reform. Economic Change and Restructuring, 48: 169-185. DOI: 10.1007/s10644-015-9159-5
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[7] Vasilev, A. 2016b. Aggregation with sequential non-convex public- and private-sector labor supply decisions, Theoretical and Practical Research in Economics ASERS 14: 173-178. Available at:
[8] Vasilev, A. 2016c. Straight time and Overtime: A Sequential-Lotteries Approach, Theoretical and Practical Research in Economics ASERS 13: 81-84. Available at:
How to Cite
VASILEV, Aleksandar. AGGREGATION WITH SEQUENTIAL INDIVISIBLE AND CONTINUOUS LABOR SUPPLY DECISIONS AND AN INFORMAL SECTOR. Theoretical and Practical Research in Economic Fields, [S.l.], v. 8, n. 2, p. 144-148, dec. 2017. ISSN 2068-7710. Available at: <>. Date accessed: 27 may 2024. doi: