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Unemployment: Walras’s Voluntary and Keynes’s Involuntary

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  • Ezra Davar

    () (Independent Researcher)

Abstract

This paper shows that Keynes’s involuntary unemployment derived from Walras’s voluntary unemployment by means of changing of the characteristic of the aggregate supply curve (function) of labour. On the one hand, when the original aggregate supply function is a strongly increasing function, as in Walras’s approach, there might be only voluntary unemployment, and its magnitude is the difference between the available quantity of labour and the equilibrium point. At the other hand, if the supply curve of labour is a weakly increasing, which means that the supply function may has a horizontal segment then there might be involuntary unemployment if the equilibrium point locates between boundary points of the horizontal segment, and the magnitude of involuntary unemployment is the difference between the right boundary point of the horizontal segment and an equilibrium point. According to Walras’s approach also might be considered “forced unemployment” which is the result of an intervention of external forces (government, monopoly, trade unions, and so on) into the market, and therefore, it is a disequilibrium phenomenon. Finally, in reality there are many types of labour, hence a suggested comprehensive approach of employment might be a useful tool for policy making and planning of economics.

Suggested Citation

  • Ezra Davar, 2015. "Unemployment: Walras’s Voluntary and Keynes’s Involuntary," Working Papers 12/2015, Institute of Economic Research, revised Mar 2015.
  • Handle: RePEc:pes:wpaper:2015:no12
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    More about this item

    Keywords

    Walras; Keynes; Voluntary Unemployment; Involuntary Unemployment; Aggregate Supply function;

    JEL classification:

    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • E0 - Macroeconomics and Monetary Economics - - General

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