Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142234
Authors: 
Vasilev, Aleksandar
Year of Publication: 
2016
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.
Subjects: 
indivisible labor
non-convexities
home production
lotteries
aggregation
discrete-continuous mix
JEL: 
E1
J22
Document Type: 
Preprint

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