Aggregation with a non-convex labor supply decision, unobservable effort, and incentive ("fair") wages

Aleksandar Vasilev

EconStor Open Access Articles and Book Chapters, 2018, vol. 9, issue 2(18), 144-147

Abstract: The purpose of this note is to explore the problem of a non-convex labor supply decision in an economy with unobservable effort and incentive ("fair") wages a la Danthine and Kurmann (2004), and explicitly perform the aggregation presented there without a formal proof, and thus provide - starting from micro-foundations - the derivation of the expected utility function 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 labor supply decisions, the elasticity of aggregate labor supply becomes a function of effort.

Keywords: Aggregation; Indivisible labor; Unobservable effort; Fair wages; Non-convexities (search for similar items in EconPapers)
JEL-codes: E1 J22 J41 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: AGGREGATION WITH A NON-CONVEX LABOR SUPPLY DECISION, UNOBSERVABLE EFFORT, AND INCENTIVE (“FAIR”) WAGES (2018)
Working Paper: Aggregation with a non-convex labor supply decision, unobservable effort, and incentive ("fair") wages (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:190747

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