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Endogenous Working Hours, Overlapping Generations and Balanced Neoclassical Growth
Irmen, Andreas


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Keywords :
Technological Change; Comparative Economic Development; Endogenous Labor Supply; Neoclassical Endogenous Growth; OLG-model
Abstract :
[en] A balanced growth path that accounts for a decline in hours worked per worker approximates the evolution of today’s industrialized countries since 1870. This stylized fact is explained in an OLG-model featuring two-period lived individuals equipped with per-period utility functions of the generalized loglog type proposed by Boppart and Krusell (2020) and a neoclassical production sector. Technological progress drives real wages up and expands the amount of consumption goods. The value of leisure increases, and the supply of hours worked declines. Technological progress moves a poor economy out of a regime with low wages and an inelastic supply of hours worked into a regime with high wages and a declining supply of hours worked. The balanced growth path is unique and stable. In the high wage regime, the equilibrium difference equation is available in closed form. A balanced growth path with declining hours worked may also be obtained with endogenous technological progress as in Romer (1986).
Disciplines :
Macroeconomics & monetary economics
Author, co-author :
Irmen, Andreas  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
Language :
Title :
Endogenous Working Hours, Overlapping Generations and Balanced Neoclassical Growth
Publication date :
04 June 2023
Focus Area :
Sustainable Development
FnR Project :
FNR11591926 - Competitive Growth Theory, 2017 (01/03/2018-30/08/2018) - Andreas Irmen
Name of the research project :
Competitive Growth Theory - CGT
Funders :
FNR Luxembourg
Available on ORBilu :
since 25 July 2023


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