Ann contemplates how much time to supply to the labour market. She formulates a simple two-...

 

Transcribed Image Text:

Ann contemplates how much time to supply to the labour market. She formulates a simple two- period model, in which she supplies time to the labour market in the first period, and is retired in the second period (no time supplied to the labour market in period two). Her (lifecycle) utility is In(C₁) + In(C₂), where C₁ and C₂ are consumption in the two periods. She assumes that she Р produces the amount of consumption using leisure, L, and market income, y, so that consumption in period i is C₁ = y¡Lį (i = 1,2). She sets total time to 1 which means that leisure is 1 - l, where l is time supplied to the labour market. Moreover, income in the second period is proportionate to labour in the first period, so that y₂ = y₁ể. How much labour will she supply to the market in period 1? - Ann contemplates how much time to supply to the labour market. She formulates a simple two- period model, in which she supplies time to the labour market in the first period, and is retired in the second period (no time supplied to the labour market in period two). Her (lifecycle) utility is In(C₁) + In(C₂), where C₁ and C₂ are consumption in the two periods. She assumes that she Р produces the amount of consumption using leisure, L, and market income, y, so that consumption in period i is C₁ = y¡Lį (i = 1,2). She sets total time to 1 which means that leisure is 1 - l, where l is time supplied to the labour market. Moreover, income in the second period is proportionate to labour in the first period, so that y₂ = y₁ể. How much labour will she supply to the market in period 1? -

Answer rating: 100% (QA)

According to the formulation C yL C y2L2 Now since she spends all her time i... View the full answer