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Discrete Dynamics in Nature and Society
Volume 2005, Issue 2, Pages 101-109

A discrete economic growth model with endogenous labor

College of Asia Pacific Management, Ritsumeikan Asia Pacific University, 1-1 Jumonjibaru, Oita Prefecture, Beppu City 874-8577, Japan

Received 11 October 2004; Revised 28 December 2004

Copyright © 2005 Hindawi Publishing Corporation. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


This paper proposes an alternative approach to economic growth with endogenous labor supply. The production side is the same as the Solow model, the Ramsey model, and the Diamond model. But we deal with the behavior of consumers differently from the traditional approaches by proposing a concept of disposable income (which is the sum of the wealth available for use, the current income from interest income, and the wage payment) and a utility function which depends on the current consumption, savings, and leisure. The model provides a mechanism of endogenous saving and labor supply which the Solow model lacks, avoids the assumption of adding up utility over a period of time upon which the Ramsey approach is based, and does not need the assumption of two-period agents which the Diamond model and many of its extensions accept.