Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/169351
Authors: 
Vasilev, Aleksandar
Year of Publication: 
2017
Citation: 
[Journal:] Theoretical and Practical Research in Economic Fields [ISSN:] 2068-7710 [Volume:] VIII [Issue:] 2 (16), Winter
Abstract: 
The purpose of this paper is to explore the problem of non-convex labor supply decision in an economy with both discrete and continuous labor decisions. In contrast to the setup in Vasilev (2016a), here each household faces a sequential labor market choice - an indivisible labor supply choice in the market sector, and conditional on non-working in the official sector, a divisible hours choice in the informal sector. We show how lotteries as in Rogerson (1988) can again be used to convexify consumption sets, and aggregate over individual preferences. With a mix of sequential discrete and continuous labor supply decisions, aggregate disutility of non-market work becomes separable from market work, and the elasticity of the latter increases from unity to infinity.
Subjects: 
Aggregation
Discrete-continuous mix
Informal economy
Sequential Lotteries
JEL: 
E1
J22
J46
Additional Information: 
forthcoming
Document Type: 
Article

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