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BrendanOO7 BrendanOO7
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6 years ago
Suppose that Lizzie has a toddler (Benjy).  Benjy is a "busy" boy and Lizzie is uncomfortable having others (relatives, babysitters, etc.) care for Benjy.  Characterize graphically Lizzie's current indifference curves (income on the vertical axis and household time on the horizontal axis).  As Benjy gets older, what, if anything will happen to Lizzie's indifference curves?  What are the implications for Lizzie's labor supply?
Textbook 
Modern Labor Economics: Theory and Public Policy

Modern Labor Economics: Theory and Public Policy


Edition: 12th
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6 years ago
At present, because of her reticence to leave Benjy in the care of others, Lizzie has very steep indifference curves.  She would have to be compensated with a large increase in income if she were to reduce her time at home.  As a consequence, it's likely that Lizzie does not participate in the labor force at present.  As Benjy ages and becomes less of a handful, we would predict that Lizzie's indifference curves will flatten out as her household production time becomes less of a necessity.  As this happens, it will become more likely that Lizzie's optimal income/household time choice incorporates some time spent working for pay.
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