tang-laborleisure-2016.pdf (415.84 kB)
Labor-leisure choice : is everything as straightforward as one might have thought?
We argue that a full understanding of a rational labor supply choice in a standard dynamic life cycle framework is obscure, despite the framework’s being seemingly self-explanatory, straightforward, and intuitively sensible. In a completely friction-free environment, we, to our knowledge, are the first to provide a complete analytic solution to the benchmark model that presumes a kind of labor supply behavior that is typically taken as the standard in economic studies. We find that
such standard behavior holds only for a narrow set of parameters. For many alternative parameterizations, the labor supply behavior of a rational agent is either highly unrealistic, or extremely hard to predict and interpret. A complete understanding of a rational, intertemporal labor supply choice requires further analysis.
such standard behavior holds only for a narrow set of parameters. For many alternative parameterizations, the labor supply behavior of a rational agent is either highly unrealistic, or extremely hard to predict and interpret. A complete understanding of a rational, intertemporal labor supply choice requires further analysis.
History
Journal
Theoretical economics lettersVolume
6Issue
4Pagination
750 - 760Publisher
Scientific Research PublishingLocation
Irvine, Cal.Publisher DOI
Link to full text
ISSN
2162-2078eISSN
2162-2086Language
engPublication classification
C Journal article; C1 Refereed article in a scholarly journalCopyright notice
2016, by authors and Scientific Research Publishing Inc.Usage metrics
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