{"title":"Stone–Geary type preferences and the long-run labor supply","authors":"Tamotsu Nakamura","doi":"10.1007/s40844-021-00204-6","DOIUrl":null,"url":null,"abstract":"<p>In most advanced economies, working hours have steadily declined, while the per-capita income has steadily increased. Boppart and Krusell (J Polit Econ 128(1):118–157, 2020) propose a new preference class in order to account for these observations. They show that the income effect on labor supply exceeds the substitution effect in the balanced-growth path. However, the longer-term changes, or less-developed economies, reveal backward-bending relationships between income and working hours. To explain this fact, we introduce Stone–Geary type non-homotheticity in preferences into a non-overlapping generations model, and analyze how working hours evolve with income. With the non-homotheticity, the long-run equilibrium labor supply bends backward. Further, the backward-bending curve emerges not only as a transitional phenomenon, but also in the balanced-growth path.</p>","PeriodicalId":44114,"journal":{"name":"Evolutionary and Institutional Economics Review","volume":null,"pages":null},"PeriodicalIF":0.6000,"publicationDate":"2021-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Evolutionary and Institutional Economics Review","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s40844-021-00204-6","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 1
Abstract
In most advanced economies, working hours have steadily declined, while the per-capita income has steadily increased. Boppart and Krusell (J Polit Econ 128(1):118–157, 2020) propose a new preference class in order to account for these observations. They show that the income effect on labor supply exceeds the substitution effect in the balanced-growth path. However, the longer-term changes, or less-developed economies, reveal backward-bending relationships between income and working hours. To explain this fact, we introduce Stone–Geary type non-homotheticity in preferences into a non-overlapping generations model, and analyze how working hours evolve with income. With the non-homotheticity, the long-run equilibrium labor supply bends backward. Further, the backward-bending curve emerges not only as a transitional phenomenon, but also in the balanced-growth path.
期刊介绍：
The Evolutionary and Institutional Economics Review (EIER) is issued by the Japan Association for Evolutionary Economics to provide an international forum for new theoretical and empirical approaches to evolutionary and institutional economics. EIER, free from the view of equilibrium economics and methodological individualism, should face the diversity of human behavior and dynamic transformation of institutions. In EIER, “economics” is used in its broadest sense. It covers areas from the classic research in economic history, economic thought, economic theory, and management science to emerging research fields such as economic sociology, bio-economics, evolutionary game theory, agent-based modeling, complex systems study, econo-physics, experimental economics, and so on. EIER follows the belief that a truly interdisciplinary discussion is needed to propel the investigation in the dynamic process of socio-economic change where institutions as emergent outcomes of human actions do matter. Although EIER is an official journal of the Japan Association for Evolutionary Economics, it welcomes non-members'' contributions from all parts of the world. All the contributions are refereed under strict scientific criteria, although EIER does not apply monolithic formalistic measure to them. Evolution goes hand in hand with diversities; this is also the spirit of EIER. Focus areas of the Review (not exhaustive): - Foundations of institutional and evolutionary economics - Criticism of mainstream views in the social sciences - Knowledge and learning in socio-economic life - Development and innovation of technologies - Transformation of industrial organizations and economic systems - Experimental studies in economics - Agent-based modeling of socio-economic systems - Evolution of the governance structure of firms and other organizations - Comparison of dynamically changing institutions of the world - Policy proposals in the transformational process of economic life
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