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Aggregation With A Non-Convex Labour Supply Decision, Unobservable Effort, And Reciprocity (“Gift Exchange”) In Labor Relations

Author

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  • Aleksandar VASILEV

    (Independent Researcher, Bulgaria)

Abstract

The purpose of this note is to explore the problem of non-convex labour supply decision in an economy with reciprocity in labour relations ("gift exchange") a la Danthine and Kurmann (2010), and explicitly perform the aggregation presented in Vasilev (2017) without a formal proof, and thus provide - starting from micro-foundations - the derivation of the expected utility functions 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 labour supply decisions, the elasticity of aggregate labour supply increases from unity to infinity.

Suggested Citation

  • Aleksandar VASILEV, 2018. "Aggregation With A Non-Convex Labour Supply Decision, Unobservable Effort, And Reciprocity (“Gift Exchange”) In Labor Relations," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 9(1), pages 45-48.
    • Handle: RePEc:srs:jtpref:v:9:y:2018:i:1:p:45-48
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    References listed on IDEAS

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    1. Danthine, Jean-Pierre & Kurmann, André, 2010. "The business cycle implications of reciprocity in labor relations," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 837-850, October.
    2. Aleksandar Vasilev, 2017. "A Real-Business-Cycle Model with Reciprocity in Labor Relations and Fiscal Policy: The Case of Bulgaria," Bulgarian Economic Papers bep-2017-03, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Mar 2017.
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    Cited by:

    1. Vasilev, Aleksandar, 2019. "Insurance-markets Equilibrium with a Non-convex Labor Supply decision, Unobservable Effort, and Incentive ("Fair") Wages," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 5(2), pages 1-9.
    2. Aleksandar Vasilev, 2021. "A Real-Business-Cycle model with search-and-matching frictions and efficiency ("fair") wages," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 64(2), pages 1-23.

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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
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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