The Marginal Rate of Substitution and the Specification of Labour Supply Models
(English)Manuscript (preprint) (Other academic)
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.
Labour Supply Model, Specification, Marginal Rate of Substitution
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-117012OAI: oai:DiVA.org:umu-117012DiVA: diva2:903981