Indivisible labor, lotteries and equilibrium

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Abstract

This paper considers an economy where labor is indivisible and agents are identical. Although the discontinuity in labor supply at the individual level disappears as a result of aggregation, it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy. It is also shown that optimal allocations involve lotteries over employment and consumption.

Original languageEnglish (US)
Pages (from-to)3-16
Number of pages14
JournalJournal of Monetary Economics
Volume21
Issue number1
DOIs
StatePublished - Jan 1988
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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