IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v194y2021ics0022053121000569.html
   My bibliography  Save this article

The supply of hours worked and fluctuations between growth regimes

Author

Listed:
  • Iong, Ka-Kit
  • Irmen, Andreas

Abstract

Declining hours of work per worker in conjunction with a growing work force may give rise to fluctuations between growth regimes. This is shown in an overlapping generations model with two-period lived individuals endowed with Boppart-Krusell preferences (Boppart and Krusell (2020)). On the supply side, economic growth is due to the expansion of consumption-good varieties through endogenous research. A sufficiently negative equilibrium elasticity of the individual supply of hours worked to an expansion in the set of consumption-good varieties destabilizes the steady state so that equilibrium trajectories may fluctuate between two growth regimes, one with and the other without an active research sector. Fluctuations affect intergenerational welfare, the evolution of GDP, and the functional income distribution. A stabilization policy can shift the economy onto its steady-state path. Fluctuations arise for empirically reasonable parameter constellations. The economics of fluctuations between growth regimes is linked to the intergenerational trade of shares and their pricing in the asset market.

Suggested Citation

  • Iong, Ka-Kit & Irmen, Andreas, 2021. "The supply of hours worked and fluctuations between growth regimes," Journal of Economic Theory, Elsevier, vol. 194(C).
    • Handle: RePEc:eee:jetheo:v:194:y:2021:i:c:s0022053121000569
    DOI: 10.1016/j.jet.2021.105239
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053121000569
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2021.105239?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Matsuyama, Kiminori, 2001. "Growing through Cycles in an Infinitely Lived Agent Economy," Journal of Economic Theory, Elsevier, vol. 100(2), pages 220-234, October.
    2. Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-283, June.
    3. Ka-Kit Iong & Andreas Irmen, 2020. "The Supply of Hours Worked and Endogenous Growth Cycles," DEM Discussion Paper Series 20-10, Department of Economics at the University of Luxembourg.
    4. Andreas Irmen, 2017. "Technological Progress, the Supply of Hours worked, and the Consumption–Leisure Complemenarity," DEM Discussion Paper Series 17-23, Department of Economics at the University of Luxembourg.
    5. Timo Boppart & Per Krusell, 2020. "Labor Supply in the Past, Present, and Future: A Balanced-Growth Perspective," Journal of Political Economy, University of Chicago Press, vol. 128(1), pages 118-157.
    6. Oded Galor, 2007. "Discrete Dynamical Systems," Springer Books, Springer, edition 1, number 978-3-540-36776-5, June.
    7. Walde, Klaus & Woitek, Ulrich, 2004. "R&D expenditure in G7 countries and the implications for endogenous fluctuations and growth," Economics Letters, Elsevier, vol. 82(1), pages 91-97, January.
    8. Deng, Liuchun & Khan, M. Ali, 2018. "On growing through cycles: Matsuyama’s M-map and Li–Yorke chaos," Journal of Mathematical Economics, Elsevier, vol. 74(C), pages 46-55.
    9. Bental, Benjamin & Peled, Dan, 1996. "The Accumulation of Wealth and the Cyclical Generation of New Technologies: A Search Theoretic Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 687-718, August.
    10. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
    11. Andreas Irmen, 2021. "Automation, growth, and factor shares in the era of population aging," Journal of Economic Growth, Springer, vol. 26(4), pages 415-453, December.
    12. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "Economic Integration and Endogenous Growth," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.), International Trade, Capital Flows and Economic Development, chapter 1, pages 3-32, World Scientific Publishing Co. Pte. Ltd..
    13. Kiminori Matsuyama, 2008. "A One‐Sector Neoclassical Growth Model With Endogenous Retirement," The Japanese Economic Review, Japanese Economic Association, vol. 59(2), pages 139-155, June.
    14. Anjan Mukherji, 2005. "Robust cyclical growth," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(3), pages 233-246, September.
    15. Walde, Klaus, 2002. "The economic determinants of technology shocks in a real business cycle model," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 1-28, November.
    16. Huberman, Michael, 2004. "Working Hours of the World Unite? New International Evidence of Worktime, 1870–1913," The Journal of Economic History, Cambridge University Press, vol. 64(4), pages 964-1001, December.
    17. Irmen, Andreas, 2005. "Extensive and intensive growth in a neoclassical framework," Journal of Economic Dynamics and Control, Elsevier, vol. 29(8), pages 1427-1448, August.
    18. Huberman, Michael & Minns, Chris, 2007. "The times they are not changin': Days and hours of work in Old and New Worlds, 1870-2000," Explorations in Economic History, Elsevier, vol. 44(4), pages 538-567, October.
    19. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    20. Kiminori Matsuyama, 1999. "Growing Through Cycles," Econometrica, Econometric Society, vol. 67(2), pages 335-348, March.
    21. Reichlin, Pietro, 1986. "Equilibrium cycles in an overlapping generations economy with production," Journal of Economic Theory, Elsevier, vol. 40(1), pages 89-102, October.
    22. Gardini, Laura & Sushko, Iryna & Naimzada, Ahmad K., 2008. "Growing through chaotic intervals," Journal of Economic Theory, Elsevier, vol. 143(1), pages 541-557, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Matsuyama, Kiminori & Ushchev, Philip, 2022. "Destabilizing effects of market size in the dynamics of innovation," Journal of Economic Theory, Elsevier, vol. 200(C).
    2. Deng, Liuchun & Khan, M. Ali & Mitra, Tapan, 2022. "Continuous unimodal maps in economic dynamics: On easily verifiable conditions for topological chaos," Journal of Economic Theory, Elsevier, vol. 201(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ka-Kit Iong & Andreas Irmen, 2020. "The Supply of Hours Worked and Endogenous Growth Cycles," DEM Discussion Paper Series 20-10, Department of Economics at the University of Luxembourg.
    2. Shinagawa, Shunsuke, 2013. "Endogenous fluctuations with procyclical R&D," Economic Modelling, Elsevier, vol. 30(C), pages 274-280.
    3. Klaus Wälde, 2005. "Endogenous Growth Cycles," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 867-894, August.
    4. Andreas Irmen, 2021. "Automation, growth, and factor shares in the era of population aging," Journal of Economic Growth, Springer, vol. 26(4), pages 415-453, December.
    5. Wälde, Klaus, 2003. "Endogenous business cycles and growth," Dresden Discussion Paper Series in Economics 12/03, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    6. Kuwahara, Shiro, 2019. "Multiplicity and stagnation under the Romer model with increasing returns of R&D," Economic Modelling, Elsevier, vol. 79(C), pages 86-97.
    7. Nikolay Chernyshev, 2017. "R&D Cyclicality and Composition Effects: A Unifying Approach," CDMA Working Paper Series 201705, Centre for Dynamic Macroeconomic Analysis.
    8. Bambi, Mauro & Gozzi, Fausto & Licandro, Omar, 2014. "Endogenous growth and wave-like business fluctuations," Journal of Economic Theory, Elsevier, vol. 154(C), pages 68-111.
    9. Deng, Liuchun & Khan, M. Ali, 2018. "On growing through cycles: Matsuyama’s M-map and Li–Yorke chaos," Journal of Mathematical Economics, Elsevier, vol. 74(C), pages 46-55.
    10. Klaus Walde, 2001. "Capital accumulation in a model of growth and creative destruction," Discussion Paper / Institute for Empirical Macroeconomics 139, Federal Reserve Bank of Minneapolis.
    11. He, Sicheng, 2022. "Growing through endogenous innovation cycles," Journal of Macroeconomics, Elsevier, vol. 71(C).
    12. Deng, Liuchun & Khan, M. Ali, 2018. "On Mitra’s sufficient condition for topological chaos: Seventeen years later," Economics Letters, Elsevier, vol. 164(C), pages 70-74.
    13. Gancia, Gino & Zilibotti, Fabrizio, 2005. "Horizontal Innovation in the Theory of Growth and Development," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 3, pages 111-170, Elsevier.
    14. Matsuyama, Kiminori & Ushchev, Philip, 2022. "Destabilizing effects of market size in the dynamics of innovation," Journal of Economic Theory, Elsevier, vol. 200(C).
    15. Kikuchi, Tomoo & Vachadze, George, 2015. "Financial liberalization: Poverty trap or chaos," Journal of Mathematical Economics, Elsevier, vol. 59(C), pages 1-9.
    16. Gardini, Laura & Sushko, Iryna, 2019. "Growing through chaos in the Matsuyama map via subcritical flip bifurcation and bistability," Chaos, Solitons & Fractals, Elsevier, vol. 124(C), pages 52-67.
    17. Olaf, POSCH & Klaus, WAELDE, 2005. "Natural volatility, welfare and taxation," Discussion Papers (ECON - Département des Sciences Economiques) 2005009, Université catholique de Louvain, Département des Sciences Economiques.
    18. Jing Wan & Jie Zhang, 2023. "R&D subsidies, income taxes, and growth through cycles," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(3), pages 827-866, October.
    19. Etro, Federico, 2017. "Research in economics and macroeconomics," Research in Economics, Elsevier, vol. 71(3), pages 373-383.
    20. Laura Gardini & Iryna Sushko, 2018. "Growing through chaos in the Matsuyama map via subcritical flip and bistability," Working Papers 1801, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2018.

    More about this item

    Keywords

    Endogenous fluctuations; Growth regimes; Endogenous technological change; Endogenous labor supply; OLG-model;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:194:y:2021:i:c:s0022053121000569. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.