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Aggregation With Two-Member Households And Home Production

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  • Aleksandar VASILEV

    (American University in Bulgaria, Bulgaria)

Abstract

This note explores the problem of family labor supply decision in an economy with two-member households, joint home production, and fixed cost of joint labor supply. Even though the labor supply decisions are not indivisible per se, the presence of such fixed cost and partners with unequal labor productivity create non-convexities. The note shows how lotteries as in Rogerson (1988) can again be used to convexify consumption sets, and we perform aggregation over individual preferences. The main result demonstrated in the paper is that aggregate preferences of males do not differ from individual level ones. However, for females, the disutility of non-market work at the aggregate becomes separable from market work, but keeps its original (logarithmic) form, while the female labor elasticity of the market hours’ supply increases from unity to infinity.

Suggested Citation

  • Aleksandar VASILEV, 2017. "Aggregation With Two-Member Households And Home Production," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 8(1), pages 73-77.
    • Handle: RePEc:srs:jtpref:v:8:y:2017:i:1:p:73-77
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    References listed on IDEAS

    as
    1. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-1085, December.
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    5. Vasilev, Aleksandar, 2016. "Aggregation with a mix of indivisible and continuous labor supply decisions: the case of home production," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 43(12), pages 1507-1512.
    6. McGrattan, Ellen R & Rogerson, Richard & Wright, Randall, 1997. "An Equilibrium Model of the Business Cycle with Household Production and Fiscal Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 267-290, May.
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    More about this item

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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