Aggregation with a mix of indivisible and continuous labor supply decisions: the case of home production

Aleksandar Vasilev

EconStor Open Access Articles and Book Chapters, 2016, vol. 43, issue 12, 1507-1512

Abstract: This note explores the problem of non-convex labor supply decision in an economy with both discrete and continuous labor decisions. In contrast to the setup in Mc-Grattan, Rogerson and Wright (1997), here each household faces an indivisible labor supply choice in the market sector, while it can choose to work any number of hours in the non-market sector. We show how lotteries as in Rogerson (1988) can again be used to convexify consumption sets, and aggregation over individual preferences. With a mix of discrete and continuous labor supply decisions, disutility of non-market work becomes separable from market work, and the elasticity of the latter increases from unity to infinity.

Keywords: Indivisible labor; home production; non-convexities; lotteries; discrete-continuous mix; aggregation (search for similar items in EconPapers)
JEL-codes: E1 J22 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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Working Paper: Aggregation with a mix of indivisible and continuous labor supply decisions: the case of home production (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:146529

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