Production Complementarities and Flexibility in a Model of Entrepreneurship

Economics

Speaker:Emircan Yurdagal, Universidad Carlos III de Madrid
Date: Wednesday 2 March 2016
Time: 13.30
Location: Xfi Henderson Lecture Theatre

Further details

This paper focuses on flexibility in working hours as a motive for entrepreneurship. The model exhibits inflexibilities for workers and entrepreneurs, which arise due to complementarities in production. In addition, it allows for volatile value of leisure to make flexibility in hours desirable. The differences in occupation-specific flexibility, disciplined with the observed patterns in hours (level, persistence, dispersion) and income (persistence, dispersion), can account for relatively low income levels of entrepreneurs in the US and for the occupation-specific distributions of working hours and income. Policy relevance of the model features is discussed using experiments of workweek restrictions and income taxation.