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Endogenous labour supply, endogenous lifetime and economic development

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  • Gori, Luca
  • Sodini, Mauro

Abstract

This article develops a theory to explain economic development in a neoclassical growth model. The (co)existence of endogenous labour supply and endogenous lifetime (affected by public and private expenditures on health) allows to effectively observe multiple development scenarios under the assumption of gross substitutability between consumption and leisure. The initial condition of a macro-economy (history) and expectation-driven coordination failures (indeterminacy) become alternative explanations of long-term demo-economic outcomes of nations. The novelty of this study is to link the theoretical literature on endogenous lifetime and economic growth with the theoretical literature on endogenous labour supply and indeterminacy by concentrating on the global analysis. The model also allows to explain the coexistence of least-developed, developing and developed countries in the same setting.

Suggested Citation

  • Gori, Luca & Sodini, Mauro, 2020. "Endogenous labour supply, endogenous lifetime and economic development," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 238-259.
    • Handle: RePEc:eee:streco:v:52:y:2020:i:c:p:238-259
    DOI: 10.1016/j.strueco.2019.11.006
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    More about this item

    Keywords

    Economic development; Endogenous labour supply; Endogenous lifetime; Local and global indeterminacy; OLG model;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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