SEPARABILITY AND THE SHADOW VALUE OF LEISURE-TIME

Recreation choices are often viewed as short-run decisions conditioned on longer-run labor supply. Using weak separability to reflect this r elationship, the wage rate is the shadow value of time for individuals who get no utility from work, whether or not they are observed to be trading time for money in the short run. This result widens the circum stances under which the wage rate (not some fraction thereof) is the t heoretically correct shadow value of time. Modifications to such a con clusion are developed for cases in which work is a source of utility a nd in which the first-stage choice is not continuous.