New answers tagged

1 vote

What kind of utility function is needed to derive a "Backwards Bending Labor Supply Curve"

Denoting leisure with $l$ consumption with $c$,the function $$ U(c,l) = \min(15;c) + l $$ works. Assume $c$ is a numeraire, there is a total of $T$ time units, no non-wage income. Optimal $l$ as a ...
Giskard's user avatar
  • 29.5k
5 votes

What kind of utility function is needed to derive a "Backwards Bending Labor Supply Curve"

This result can be derived with CES preferences between consumption and leisure, if consumption and leisure are assumed to be complements. In particular, suppose $u(c,l)=\left[ c^{\rho } +( 1-l)^{\rho ...
cruijf's user avatar
  • 51
-2 votes

What kind of utility function is needed to derive a "Backwards Bending Labor Supply Curve"

One way to conceptualize a backwards bending labour supply curve is that leisure is effectively a Giffen good. When the price of leisure (ie. the wage) rises, the worker demands more leisure because ...
H Rogers's user avatar
  • 640
2 votes
Accepted

What exactly is an exogenous stationary distribution?

Here is explanation for the terms: Exogenous - determined outside the system/model being studied. For example, if you study macroeconomic model without explicitly modelling weather patterns, bad ...
1muflon1's user avatar
  • 56.4k

Top 50 recent answers are included