Aggregation with sequential indivisible and continuous labor supply decisions and an informal sector

Preprint

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 o fficial 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 in finity.

Object Details

• Language: Englisch

Classification and Topics

• Classification: Wirtschaft ; Time Allocation and Labor Supply ; Informal Labor Markets
• Subject: Aggregation ; Indivisible Labor ; Discrete-continuous mix ; Informal economy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Vasilev, Aleksandar
• Event: Veröffentlichung
• (who): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel und Hamburg
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/168335
• Last update: 10.03.2025, 11:43 AM CET