INDIVISIBLE LABOR SUPPLY AND INVOLUNTARY UNEMPLOYMENT: MONOPOLISTIC COMPETITION MODEL

Yasuhito Tanaka

The Singapore Economic Review (SER), 2023, vol. 68, issue 06, 1953-1966

Abstract: This paper is an attempt to provide a micro-theoretical basis for Keynesian economics while maintaining as much of the neoclassical framework as possible, such as utility maximization for consumers and profit maximization for firms. We show the existence of involuntary unemployment without assuming wage rigidity when labor supplies of individuals are indivisible. We derive involuntary unemployment using an overlapping generations model under monopolistic competition with constant returns to scale technology and indivisible labor supply.

Keywords: Monopolistic competition; overlapping generations model; involuntary unemployment; indivisible labor supply (search for similar items in EconPapers)
JEL-codes: E12 E24 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Indivisible labor supply and involuntary unemployment: Monopolistic competition model (2019)
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DOI: 10.1142/S0217590820500307

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