Overlapping Generations Model with EndogenousLabor Supply: General Formulation

Alain Venditti and Carine Nourry

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Abstract: This paper develops a one-sector overlapping generations modelwith endogenous labor supply and nonseparable preferences. It demonstratesthat local indeterminacy arises easily under gross substitutability as soon asthere exist multiple steady states. We show also that, depending on whetherleisure and second-period consumption are gross substitutes, local indeterminacyholds for very different parameter configurations. If gross substitutabilityis satisfied, the existence of multiple equilibrium paths requires the share ofcapital in the total income to be strong enough with respect to the elasticity ofcapital-labor substitution. On the other hand, if gross substitutability is violated,local indeterminacy necessitates the share of capital in the total incometo be weak enough with respect to the elasticity of capital-labor substitution.

Keywords: Indeterminacy; endogenous cycles; overlapping generations; endogenous labor supply.; endogenous labor supply (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (2)

Published in Journal of Optimization Theory and Applications, 2006, 128 (2), pp.355-377. ⟨10.1007/s10957-006-9026-7⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00280000

DOI: 10.1007/s10957-006-9026-7

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