Aiyagari model with endogenous labor supply

I was wondering if there is an example of the Aiyagari (or a similar Bewley model) with elastic labor supply either in the lectures or in the notes.

If not, I see (at least) two ways of implementing it: (1) build on the discrete dynamic programming class and add a grid for labor supply, call it d (where d is a static choice). (2) use time iteration and when looping over a’ (next period assets) insert another loop over labor supply, so that labor supply is a function of (a’,a,z), where a denotes current assets and z denotes current labor productivity shock

Hi @aledinola, good question. At this stage we don’t have it but we have been meaning to add it for quite a while. The only reason we haven’t is time constraints.

I think time iteration would be the best option. If you have time and interest you could work together with one of the QuantEcon RAs to implement this. If it works out well we might add it as a lecture.

Thanks for your nice thoughts @aledinola and @john.stachurski. Very interesting to me.

I created an issue to discuss and implement this version of the Aiyagari model here:

Feel free to discuss and collaborate with us @aledinola .