[Journal:] Theoretical and Practical Research in Economic Fields [ISSN:] 2068-7710 [Volume:] VII [Issue:] 1(13) [Pages:] 1-5
This note explores the problem of aggregation with non-convex labor supply decisions in an economy with both straight time and overtime. In contrast to Hansen and Sargent (1988), the paper models this as a sequential decision. Instead of changing from one to infinity, with a sequential non-convexity, the aggregate elasticity of labor supply for overtime work is a function of overall participation rate, and the aggregate elasticity of labor supply for full-time work depends on the share of workers doing overtime.
Indivisible labor Straight time Overtime Sequential Lotteries