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Insurance-Markets Equilibrium with Double Indivisible Labor Supply


  • Aleksandar Vasilev

    () (Department of Economics, American University in Bulgaria, Blagoevgrad, Bulgaria)


This note describes the lottery- and insurance-market equilibrium in an economy with both private and public sector employment and non-convex labor supply. In addition, when households are constrained to search for jobs only in a certain sector, the framework requires that there should be separate insurance markets: a public and a private sector one, which would pool the unemployment risk of the corresponding group of households. The unemployment insurance market segmentation is a new result in the literature and a direct consequence of the non-convexity of the labor supply in each sector and the sorting effect of the sector-type shock introduced in the model setup.

Suggested Citation

  • Aleksandar Vasilev, 2015. "Insurance-Markets Equilibrium with Double Indivisible Labor Supply," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 9(2), pages 091-103, December.
  • Handle: RePEc:fau:aucocz:au2015_091

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    References listed on IDEAS

    1. Hansen, Gary D., 1985. "Indivisible labor and the business cycle," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 309-327, November.
    2. Vasilev, Aleksandar, 2015. "Macroeconomic effects of public-sector unions," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 101-126.
    3. Aleksandar Vasilev, 2016. "Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 47.
    4. Vasilev, Aleksandar, 2013. "Technical Appendix to "Macroeconomic effects of public sector unions"," MPRA Paper 68235, University Library of Munich, Germany, revised Dec 2015.
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    Cited by:

    1. Vasilev, Aleksandar, 2018. "Indeterminacy and multiplicity of equilibria in a two-sector economy with a public-sector production," EconStor Preprints 184666, ZBW - Leibniz Information Centre for Economics.
    2. repec:zbw:espost:172329 is not listed on IDEAS
    3. Vasilev, Aleksandar, 2017. "Insurance-markets Equilibrium with Sequential Non-convex Market-Sector- and Divisible Informal-Sector Labor Supply," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics.
    4. Vasilev, Aleksandar, 2017. "Insurance-markets Equilibrium with Sequential Non-convex Private- and Public-Sector Labor Supply," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics.

    More about this item


    Indivisible labor; public employment; insurance;

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure


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