Question

Do the income and substitution effects have the same impact on labor market work in the two models? 

          Do the income and substitution effects have the same impact on labor market work in the two models?

Added by Cristian J.

Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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Do the income and substitution effects have the same impact on labor market work in the two models?
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Transcript

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00:01 So let's compare becker's model of allocation of time to the simple work leisure choice model.
00:48 So becker's time allocation model assumes that households behave as single decision makers with rational preferences.
01:00 So becker's model focuses on households rather than the individual.
01:50 So in the labor leisure choice model, people do not obtain utility just from products they purchase.
02:00 They also obtain utility from leisure time.
02:23 Also there is a budget constraint that's allocated between labor and leisure.
02:43 So we only have a certain amount of time and energy to dedicate to either labor or leisure...
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