We compare two options of integrating discrete working time choice of heterogenous households into a general equilibrium model. The first, known from the literature, produces household heterogeneity through a working time preference parameter. We contrast this with a model that directly incorporates a logit discrete-choice approach into a AGE framework. On the grounds of both calibration consistency and adequate accomodation of within-household interaction, we argue that the logit approach is preferable.
Arntz, Melanie, Stefan Boeters and Nicole Gürtzgen (2005), Alternative Approaches to Discrete Working Time Choice in an AGE Framework, ZEW Discussion Paper No. 05-62, Mannheim. Download