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Insurance-Markets Equilibrium with Double Indivisible Labor Supply

Listed author(s):
  • 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.

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Article provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its journal Czech Economic Review.

Volume (Year): 9 (2015)
Issue (Month): 2 (December)
Pages: 091-103

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Handle: RePEc:fau:aucocz:au2015_091
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  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 - German National Library of 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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