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The Marginal Rate of Substitution and the Specification of Labour Supply Models
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.ORCID iD: 0000-0001-9244-7018
(English)Manuscript (preprint) (Other academic)
Abstract [en]

In this note I revisit Heckman's proposal, [Heckman, 1974], to specify a static labour supply model using a simple formulation for the Marginal Rate of Substitution between total expenditure on consumption and hours of work. I describe the analytical form of the expenditure function and I show how the direct and indirect utility functions can be recovered. I propose an alternative specification for the MRS and in this case I describe analytically the labour supply functions, the indirect and direct utility functions as well as the expenditure function.

Keyword [en]
Labour Supply Model, Specification, Marginal Rate of Substitution
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URN: urn:nbn:se:umu:diva-117012OAI: diva2:903981
Available from: 2016-02-17 Created: 2016-02-17 Last updated: 2016-02-17

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Lanot, Gauthier
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ReferencesLink to record
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