Resource allocation in a general equilibrium model of production under uncertainty: The case of variable supply of labor (Q1820999)
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English | Resource allocation in a general equilibrium model of production under uncertainty: The case of variable supply of labor |
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Resource allocation in a general equilibrium model of production under uncertainty: The case of variable supply of labor (English)
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1986
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This paper examines the effects of a marginal change in uncertainty on resource allocation and factor rewards by relaxing the assumption of factor inelasticity. We demonstrate that integrating a variable labor supply into Batra's two-sector uncertainty model can multigate or reverse many of the earlier results. Specifically, a marginal increase in uncertainty may trigger the resource to move from the certainty sector to the uncertainty sector in the presence of a backward-bending labor supply curve.
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marginal change in uncertainty
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resource allocation
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factor rewards
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