The Wise Use of Leisure Time. An Endogenous Growth Model With Leisure Services

35 Pages Posted: 4 Aug 2016

See all articles by Guido Candela

Guido Candela

University of Bologna - Department of Economics

Massimiliano Castellani

University of Bologna - Department of Economics

Roberto Dieci

Department of Mathematics, University of Bologna

Date Written: March 21, 2016

Abstract

In this paper, starting from the Uzawa-Lucas endogenous growth framework with production of physical and human capital, we develop and investigate a model with an additional sector for the production of leisure services. In turn, our three-sector model builds on and extends Ladrón-de Guevara et al. [1999] - where the utility function depends only on consumption of physical goods and on ‘pure’ leisure - by introducing consumption of leisure services. As the latter is a time- consuming activity, the model also generalizes the standard time allocation problem, in that total available time can be allocated among work, education, purely free time and leisure activities in our framework. We characterize analytically the Balanced Growth Paths of this general model, particularly in terms of time allocation and growth. We carry out a comparative analysis across different Service Economies that are supposed to be at their equilibrium, including an ‘Industrial Economy’ without service sector, as well across possibly multiple equilibria of the same economy. Part of the analysis is based on an intuitive yet rigorous framework for determining and representing Balanced Growth Paths in the space of time allocation decisions.

Suggested Citation

Candela, Guido and Castellani, Massimiliano and Dieci, Roberto, The Wise Use of Leisure Time. An Endogenous Growth Model With Leisure Services (March 21, 2016). Available at SSRN: https://ssrn.com/abstract=2817835 or http://dx.doi.org/10.2139/ssrn.2817835

Guido Candela

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 0541 434118-9 (Phone)
+39 0541 434120 (Fax)

Massimiliano Castellani (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Roberto Dieci

Department of Mathematics, University of Bologna ( email )

Piazza di Porta San Donato, 5
Bologna, I-40126
Italy

HOME PAGE: http://www.unibo.it/Faculty/default.aspx?UPN=roberto.dieci%40unibo.it

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