In this paper we analyze and propose new method and algorithm of selecting the optimal labor time as a function of skills following our main references Mirrlees (1971), Saez (2001) and Stancheva (2014). The optimal labor time is a situation when the utility function of individual reaches a maximum. One of the main differences with Saez (2001) is our algorithm for creation the skill distribution.

In this paper we analyze and propose new method and algorithm of selecting the optimal labor time as a function of skills following our main references Mirrlees (1971), Saez (2001) and Stancheva (2014). The optimal labor time is a situation when the utility function of individual reaches a maximum. One of the main differences with Saez (2001) is our algorithm for creation the skill distribution