Overlapping Generations Model with Endogenous
Labor Supply: General Formulation

Alain Venditti , Carine Nourry (1)

1 GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille

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

Mots clés: Indeterminacy; endogenous cycles; overlapping generations; <br />endogenous labor supply.; <br />endogenous labor supply

Domaines: Economies et finances

Alain Venditti, Carine Nourry. Overlapping Generations Model with Endogenous
Labor Supply: General Formulation. Journal of Optimization Theory and Applications, 2006, 128 (2), pp.355-377. ⟨10.1007/s10957-006-9026-7⟩. ⟨halshs-00280000⟩