Indivisible labor and the business cycle-英文文献.pdf

Journal of Monetary Economics 16 (1985) 309-327. North-Holland INDIVISIBLE LABOR AND THE BUSINESS CYCLE Gary D. HANSEN* Unioersify of California, Santa Barbara, CA 93104, USA A growth model with shocks to technology is studied. Labor is indivisible, so all variability in hours worked is due to fluctuations in the number employed. We find that, unlike previous equilibrium models of the business cycle, this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity. This finding is independent of individuals’ willingness to substitute leisure across time. This and other findings are the result of studying and comparing summary statistics describing this economy, an economy with divisible labor, and post-war U.S. time series. 1. Introduction Equilibrium theories of the business cycle, such as Kydland and Prescott (1982) or Lucas (1977), have been criticized for failing to account for some important labor market phenomena. These include the existence of unem- ployed workers, fluctuations in the rate of unemployment, and the observation that fluctuations in hours worked are large relative to productivity fluctuations. Equilibrium models have also been criticized for depending too heavily on the willingness of individuals to substitute leisure across time in response to wage or interest rate changes when accounting for the last observation. This criticism is based at least partially on t