Vasilev, Aleksandar (2018) Aggregation with a Non-Convex Labour Supply Decision, Unobservable Effort, and Reciprocity (“Gift Exchange”) in Labor Relations. Theoretical and Practical Research in Economic Fields, 9 (1(17)). pp. 45-48. ISSN 2068 – 7710
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| Item Type: | Article |
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| Item Status: | Live Archive |
Abstract
The purpose of this note is to explore the problem of non-convex labour supply decision in an economy with
reciprocity in labour relations ("gift exchange") a la Danthine and Kurmann (2010), and explicitly perform the
aggregation presented in Vasilev (2017) without a formal proof, and thus provide - starting from micro-foundations
- the derivation of the expected utility functions used for the aggregate household. We show how lotteries as in
Rogerson (1988) can be used to convexify consumption sets, and aggregate over individual preferences. With a
discrete labour supply decisions, the elasticity of aggregate labour supply increases from unity to infinity.
| Keywords: | aggregation, non-convexity, reciprocity |
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| Subjects: | L Social studies > L120 Microeconomics L Social studies > L130 Macroeconomics |
| Divisions: | Lincoln International Business School |
| ID Code: | 35524 |
| Deposited On: | 08 Apr 2019 13:05 |
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