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Aggregate implications of indivisible labor, incomplete markets, and labor market frictions Author info | Abstract | Publisher info | Download info | Related research | Statistics Krusell, Per
Mukoyama, Toshihiko
Rogerson, Richard
Sahin, Aysegül
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We study the impact of tax and transfer programs on steady-state allocations in a model with search frictions, an operative labor supply margin, and incomplete markets. In a benchmark model that has indivisible labor and incomplete markets but no trading frictions we show that the aggregate effects of taxes are identical to those in the economy with employment lotteries, though individual employment and asset dynamics can be different. The effect of frictions on the response of aggregate hours to a permanent tax change is highly nonlinear. There is considerable scope for substitution between "voluntary" and "frictional" nonemployment in some situations.
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Article provided by Elsevier in its journal Journal of Monetary Economics .
Volume (Year): 55 (2008)
Issue (Month): 5 (July)
Pages: 961-979
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Handle: RePEc:eee:moneco:v:55:y:2008:i:5:p:961-979Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Low, Hamish & Meghir, Costas & Pistaferri, Luigi, 2008.
"Wage Risk and Employment Risk over the Life Cycle ,"
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Hamish Low & Costas Meghir & Luigi Pistaferri, 2009.
"Wage Risk and Employment Risk over the Life Cycle ,"
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[Downloadable!] (restricted) Luigi Pistaferri & Hamish Low & Costas Meghir, 2004.
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Per Krusell & Toshihiko Mukoyama & Richard Rogerson & Aysegul Sahin, 2009.
"Aggregate Labor Market Outcomes: The Role of Choice and Chance ,"
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