Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours

Vasilev, Aleksandar (2016) Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours. Ekonomia Journal, 47 (5). pp. 123-133. ISSN 0137-3056

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Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours
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Abstract

This paper explores the problem of non-convex labor supply decisions in an economy with both private and public sector jobs. To this end, Hansen (1985) and Rogerson’s (1988) indivisible-hours framework is extended to an environment featuring a double discrete labor choice. The novelty of the study is that the micro-founded representation obtained from explicit aggregation over homogeneous individuals features different disutility of labor across the two sectors, which is in line with the observed difference in average wage rates (OECD 2011). Therefore, this theory-based utility function could be utilized to study labor supply responses over the business cycle.

Keywords:indivisible labor, public employment, aggregation, elasticity of labor supply
Subjects:L Social studies > L130 Macroeconomics
L Social studies > L100 Economics
Divisions:Lincoln International Business School
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ID Code:34029
Deposited On:22 Nov 2018 17:06

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