Calibrate disutility of work

Dear all,

I want to calibrate the disutility of working for a developing country. As such I want theta (disutility of working parameter) to match the fact that on average people in developing countries work 40% of their non-sleeping time. I do however not know how to do this :frowning:

I think my problem starts with the fact that I don’t know how to relate/ convert the steady state value of labour to hours worked.

Any tips or trics? Or papers that describe detailed how they do this?

Thank you!

PS: my utility function without the E_0 and the sum sign: beta C_t^(1-sigma)/(1-sigma) - theta * L_t^(1+chi)/(1+chi)]

That means that in steady state you set L=0.4. What you need to do is analytically compute your steady state, take L as given and compute the labor disutility parameter consistent with this steady state. An example is at github.com/JohannesPfeifer/DSGE_mod/blob/master/RBC_baseline/RBC_baseline.mod

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