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A Further Note on the Theory of Labor Supply with Wage Rate Uncertainty : Comment

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Authors
Kim, Iltae
Issue Date
1999
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 12 (No. 2 1999): 195-198
Keywords
one arguement utility function; Horowitz
Abstract
In this Journal (1994), Horowitz uses a mean-variance approach to demonstrate that Kim's (1994) comparative statics results concerning the effect of an increase in risk on labor supply established in the framework of the expected utility hypothesis can be also derived when variance is used as a measure of changes in risk. The merit of Horowitz's contribution is that. for small risks, it makes the consistency between two approaches for two-argument utility function more clearly known. However, Horowitz's results obtained in the framework of the mean-variance approach are consistent with prediction reached by Kim only when a restriction is imposed on the type of an increase in risk. The purpose of this note is to clarify that Horowitz's conclusions do not hold in general but when a specific condition on the random variable in a choice set is assumed or satisfied.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1156
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.12(2) (Summer 1999)
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