Insurance-markets Equilibrium with Sequential Non-convex Market-Sector and Divisible Informal-Sector Labor Supply

Aleksandar Vasilev

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: This paper describes the lottery- and insurance-market equilibrium in an economy with non-convex market-sector employment and informal sector work. In contrast to Vasilev (2016a), the discrete-continuous labor supply decision in this paper is a sequential one, and instead of home production, we focus on informal activity. This still requires a single insurance market to operate - in particular, one for market-sector employment. In addition, given that the labor choice for market- and informal-sector hours is made in succession, the insurance market for market employment needs to close before the- labor supply choice in the grey economy is made. This segmentation is reminiscent of the results obtained in Vasilev (2015) and also a direct consequence of the sequential nature of the discrete-continuous sectoral labor supply decision.

Keywords: indivisible labor; lotteries; discrete-continuous mix; insurance; informal economy (search for similar items in EconPapers)
JEL-codes: J22 J46 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ias and nep-iue
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https://www.econstor.eu/bitstream/10419/168354/1/insurance_mkts_grey_sector.pdf (application/pdf)

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Journal Article: Insurance-markets Equilibrium with Sequential Non-convex Market-Sector- and Divisible Informal-Sector Labor Supply (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:168354

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