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Overlapping Generations Model with EndogenousLabor Supply: General Formulation

Author

Listed:
  • Alain Venditti

    ()

  • Carine Nourry

    () (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)

Abstract

This paper develops a one-sector overlapping generations modelwith endogenous labor supply and nonseparable preferences. It demonstratesthat local indeterminacy arises easily under gross substitutability as soon asthere exist multiple steady states. We show also that, depending on whetherleisure and second-period consumption are gross substitutes, local indeterminacyholds for very different parameter configurations. If gross substitutabilityis satisfied, the existence of multiple equilibrium paths requires the share ofcapital in the total income to be strong enough with respect to the elasticity ofcapital-labor substitution. On the other hand, if gross substitutability is violated,local indeterminacy necessitates the share of capital in the total incometo be weak enough with respect to the elasticity of capital-labor substitution.

Suggested Citation

  • Alain Venditti & Carine Nourry, 2006. "Overlapping Generations Model with EndogenousLabor Supply: General Formulation," Post-Print halshs-00280000, HAL.
  • Handle: RePEc:hal:journl:halshs-00280000
    DOI: 10.1007/s10957-006-9026-7
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00280000
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    References listed on IDEAS

    as
    1. Nourry, Carine, 2001. "Stability of equilibria in the overlapping generations model with endogenous labor supply," Journal of Economic Dynamics and Control, Elsevier, vol. 25(10), pages 1647-1663, October.
    2. Reichlin, Pietro, 1986. "Equilibrium cycles in an overlapping generations economy with production," Journal of Economic Theory, Elsevier, vol. 40(1), pages 89-102, October.
    3. Cazzavillan, Guido, 2001. "Indeterminacy and Endogenous Fluctuations with Arbitrarily Small Externalities," Journal of Economic Theory, Elsevier, vol. 101(1), pages 133-157, November.
    4. Guido Cazzavillan & Patrick A. Pintus, 2004. "Robustness of Multiple Equilibria in OLG Economies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(2), pages 456-475, April.
    5. Grandmont, Jean-Michel & Pintus, Patrick & de Vilder, Robin, 1998. "Capital-Labor Substitution and Competitive Nonlinear Endogenous Business Cycles," Journal of Economic Theory, Elsevier, vol. 80(1), pages 14-59, May.
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    Cited by:

    1. Hippolyte D'Albis & Emmanuelle Augeraud-Veron, 2008. "Endogenous Retirement and Monetary Cycles," Mathematical Population Studies, Taylor & Francis Journals, vol. 15(4), pages 214-229.

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