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Endogenous labour supply, habits and aspirations

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  • Luciano Fanti
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    Abstract

    Motivated by the increasing literature on endogenous preferences, this paper investigates the implications of the introduction of habit and aspiration formation when labour supply is endogenous, in an OLG small open economy. In contrast with models with exogenous labour supply where aspirations always reduce economic performance, we show that in a model with endogenous labour supply greater aspirations lead to a higher long run savings and economic performance, through their impact on the labour/leisure choice.

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    Bibliographic Info

    Paper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2012/144.

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    Date of creation: 01 Sep 2012
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    Handle: RePEc:pie:dsedps:2012/144

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    Keywords: Endogenous preferences; Fertility; OLG model.;

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