Slutsky equation and negative elasticity of labor supply: behavioral bias or optimal consumption-leisure choice?

One of the applications of the prospect theory is the behavioral phenomenon of the negative elasticity of the individual labor supply. This working paper argues that the negative elasticity of labor supply can be understood better with the help of the interpretation of the Slutsky equation with regard to the common consumption-leisure choice.

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Year of publication:	2014-02-21
Authors:	Malakhov, Sergey
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Slutsky equation \| prospect theory \| labor supply \| consumption-leisure choice

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	D11 - Consumer Economics: Theory
Source:	RePEc - Research Papers in Economics

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