Labor supply with stochastic wage rate and non-labor income uncertainty

Jianli Wang () and Pu Gong

Journal of Economics, 2013, vol. 109, issue 1, 55 pages

Abstract: This paper deals with the labor supply problem in the contemporaneous presence of wage rate and non-labor income uncertainties. We examine the effect of a stochastic wage rate(a non-labor income uncertainty) on labor supply in the presence of a non-labor income uncertainty(a stochastic wage rate) and provide some conditions of utility function for assuring larger labor supply. We study the joint effect of two types of uncertainty on labor supply when two risks are either small or positive quadrant dependent. Our work extends the previous model of labor supply to two-risk framework and shows some new explorations on the classical issue of labor supply under uncertainty. Copyright Springer-Verlag 2013

Keywords: Labor supply; Stochastic wage rate; Non-labor income uncertainty; Partial relative prudence measure; Cross-prudent; D81 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:109:y:2013:i:1:p:41-55

DOI: 10.1007/s00712-012-0293-5

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