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Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours

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  • Vasilev, Aleksandar

Abstract

This paper explores the problem of non-convex labor supply decisions in an economy with both private and public sector jobs. To this end, Hansen (1985) and Rogerson's (1988) indivisible-hours framework is extended to an environment featuring a double discrete labor choice. The novelty of the study is that the micro-founded representation obtained from explicit aggregation over homogeneous individuals features different disutility of labor across the two sectors, which is in line with the observed difference in average wage rates (OECD 2011). This theory-based utility function could be then utilized to study labor supply responses over the business cycle.

Suggested Citation

  • Vasilev, Aleksandar, 2016. "Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 47, pages 123-133.
    • Handle: RePEc:zbw:espost:148273
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    References listed on IDEAS

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    1. Hansen, Gary D., 1985. "Indivisible labor and the business cycle," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 309-327, November.
    2. Linnemann, Ludger, 2009. "Macroeconomic effects of shocks to public employment," Journal of Macroeconomics, Elsevier, vol. 31(2), pages 252-267, June.
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    Cited by:

    1. Aleksandar Vasilev, 2020. "Indeterminacy and Multiplicity of Equilibria in a Two-sector Economy with a Public-sector Production," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 63(1), pages 18-43.
    2. Aleksandar VASILEV, 2016. "Aggregation With Sequential Non-Convex Public - And Private - Sector Labor Supply Decisions," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 7(2), pages 174-178.
    3. Vasilev, Aleksandar, 2017. "Insurance-markets Equilibrium with Sequential Non-convex Private- and Public-Sector Labor Supply," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 2(2), pages 19-34.
    4. Aleksandar Vasilev, 2015. "Insurance-Markets Equilibrium with Double Indivisible Labor Supply," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 9(2), pages 091-103, December.

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    More about this item

    Keywords

    indivisible labor; public employment; aggregation; elasticity of labor supply;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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