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Endogenous labour supply, habits and aspirations

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  • Luciano Fanti

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.

Suggested Citation

  • Luciano Fanti, 2012. "Endogenous labour supply, habits and aspirations," Discussion Papers 2012/144, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  • Handle: RePEc:pie:dsedps:2012/144
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    File URL: http://www.ec.unipi.it/documents/Ricerca/papers/2012-144.pdf
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    More about this item

    Keywords

    Endogenous preferences; Fertility; OLG model.;

    JEL classification:

    • 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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