Aggregation with two-member households and home production

Vasilev, Aleksandar (2017) Aggregation with two-member households and home production. Theoretical and Practical Research in Economic Fields, 8 (1(15)). pp. 73-77. ISSN 2068 – 7710

Aggregation with two-member households and home production
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This note explores the problem of family labor supply decision in an economy with two-member households, joint
home production, and fixed cost of joint labor supply. Even though the labor supply decisions are not indivisible
per se, the presence of such fixed cost and partners with unequal labor productivity create non-convexities. The
note shows how lotteries as in Rogerson (1988) can again be used to convexify consumption sets, and we
perform aggregation over individual preferences. The main result demonstrated in the paper is that aggregate
preferences of males do not differ from individual level ones. However, for females, the disutility of non-market
work at the aggregate becomes separable from market work, but keeps its original (logarithmic) form, while the
female labor elasticity of the market hours’ supply increases from unity to infinity.

Keywords:family labor supply, home production, aggregation
Subjects:L Social studies > L120 Microeconomics
L Social studies > L130 Macroeconomics
Divisions:Lincoln International Business School
ID Code:35525
Deposited On:08 Apr 2019 13:06

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