Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190747
Authors: 
Vasilev, Aleksandar
Year of Publication: 
2018
Citation: 
[Journal:] Theoretical and Practical Research in Economic Fields [ISSN:] 2068-7710 [Volume:] 9 [Issue:] 2(18) [Pages:] 144-147
Abstract: 
The purpose of this note is to explore the problem of a non-convex labor supply decision in an economy with unobservable effort and incentive ("fair") wages a la Danthine and Kurmann (2004), and explicitly perform the aggregation presented there without a formal proof, and thus provide - starting from micro-foundations - the derivation of the expected utility function used for the aggregate household. We show how lotteries as in Rogerson (1988) can be used to convexify consumption sets, and aggregate over individual preferences. With a discrete labor supply decisions, the elasticity of aggregate labor supply becomes a function of effort.
Subjects: 
Aggregation
Indivisible labor
Unobservable effort
Fair wages
Non-convexities
JEL: 
E1
J22
J41
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)

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