A two-sector model of endogenous growth with leisure

Antonio Ladrón-De-Guevara, Salvador Ortigueira, Manuel S. Santos

Research output: Contribution to journalArticlepeer-review

79 Scopus citations


This paper analyses the equilibrium dynamics of an endogenous growth model with physical and human capital in which leisure enters the utility function. The inclusion of leisure introduces a potential source of non-convexities in our optimization problem and leads to the possible existence of multiple balanced growth paths. This multiplicity of optimal stationary solutions is linked to the assumption that education has no effect on the quality of leisure, and hence a relatively more educated economy may choose to grow faster, and devote more time to income-directed activities. To characterize the set of optimal solutions in our non-concave optimization framework we develop a new method of analysis that should be of interest in related applications.

Original languageEnglish (US)
Pages (from-to)609-631
Number of pages23
JournalReview of Economic Studies
Issue number3
StatePublished - Jul 1999
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics


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