TY  - JOUR
AU  - Mulligan,Casey B.
TI  - Microfoundations and Macro Implications of Indivisible Labor
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7116
PY  - 1999
Y2  - May 1999
UR  - http://www.nber.org/papers/w7116
L1  - http://www.nber.org/papers/w7116.pdf
N1  - Author contact info:
Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL  60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu
AB  - I show that the  indivisible labor' models of Diamond and Mirrlees (1978, 1986), Hansen (1985), Rogerson (1988), Christiano and Eichenbaum (1992), and many others are, when aggregated across persons with the same marginal utility of income, equivalent to the divisible labor model of Lucas and Rapping (1969); any data on aggregate hours and earnings generated by the divisible (indivisible) model can be generated by some parameterization of the indivisible (divisible) model.  The same is true when  macro' data is obtained by aggregating over time and across people.  This equivalence means that the indivisibility of labor per se does not have implications for macroeconomics.  Nor does indivisibility have  aggregate' normative implications. I then build a micro model of the bunching of work in continuous time as the consequence of fixed costs and  fatigue effects.' Only in a special case does the micro model has as its reduced form the indivisible labor model.  In other cases, the bunching of work in time may have unique macro implications.  Indivisible and bunching models of labor are shown to have implications for public finance.
ER  -