The independence of involuntary unemployment from nominal or real wages: a general equilibrium model

Nicolas Piluso ()
Additional contact information
Nicolas Piluso: CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2J - Université Toulouse - Jean Jaurès - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - UT3 - Université Toulouse III - Paul Sabatier - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - CNRS - Centre National de la Recherche Scientifique, Comue de Toulouse - Communauté d'universités et établissements de Toulouse, IUT Toulouse Auch Castres - Institut Universitaire de Technologie - Paul Sabatier - UT3 - Université Toulouse III - Paul Sabatier - Comue de Toulouse - Communauté d'universités et établissements de Toulouse

Post-Print from HAL

Abstract: Keynes's ‘conjecture' that there are general equilibria of involuntary unemployment that are resistant to falling wages has now been demonstrated, albeit at the cost of making relatively restrictive assumptions about how markets or anticipation functions operate. This article aims to show that a general equilibrium model can be constructed based on assumptions widely accepted by economists, such as rejecting the Keynesian ‘second classical postulate' and differentiating between households of employees and shareholders. In this model, involuntary unemployment is independent of wages. In this model, unemployment is explained solely by the determinants of effective demand: households' marginal propensities to consume, the incentive to invest, and the interest rate. This marginal modification of the general equilibrium model calls into question the first welfare theorem, specifically the Pareto optimality of general equilibrium.

Date: 2026-01-05
References: Add references at CitEc
Citations:

Published in Series - Journal of the Spanish Economic Association, 2026, ⟨10.1007/s13209-025-00328-7⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05442409

DOI: 10.1007/s13209-025-00328-7

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().