In what specific ways does Becker\'s model of the allocation if time differ from
ID: 1167731 • Letter: I
Question
In what specific ways does Becker's model of the allocation if time differ from the simple work-leisure choice model ? Compare the functioning of the income and substitution effects in each of the two models. Do the two effects have the same impact upon labor market work in both models? In what specific ways does Becker's model of the allocation if time differ from the simple work-leisure choice model ? Compare the functioning of the income and substitution effects in each of the two models. Do the two effects have the same impact upon labor market work in both models? In what specific ways does Becker's model of the allocation if time differ from the simple work-leisure choice model ? Compare the functioning of the income and substitution effects in each of the two models. Do the two effects have the same impact upon labor market work in both models?Explanation / Answer
Becker's model of work leisure is different from the simple work leisure model. Unlike the simple work- leisure model, Becker model uses the household perspective and multiple uses of the time. In other words, time can be put to the different uses. Household is key decision making body and it would depends on the household if wife will go for work or if husband is employed. Household should use the time efficiently, if participation in the labor market is more productive then, invididual should participate in it.
Becker income effect: When income of household increases, it reduces work since it needs the time to consume. It provide the same result as the simple work- leisure model, but rationale are different in both models.
Becker Substitution effect: Higher wage calls for the more sustitution of work hours. It is case of good intensive commodities
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