Econometrica: Jan 1950, Volume 18, Issue 1

The Notion of Involuntary Economic Decisions

https://doi.org/0012-9682(195001)18:1<1:TNOIED>2.0.CO;2-I
p. 1-8

Trygve Haavelmo

The Keynesian definition of involuntary unemployment has given rise to much controversy. According to this definition it is useless to discuss problems of involuntary unemployment within a consistent economic model if one of its equations is the classical supply function of labor, because there can be no involuntary unemployment within such a model. Similar problems arise whenever one tries to demonstrate the possibility of involuntary individual economic decisions within a given model of economic behavior. It is the contention of the present writer that the notion of involuntary economic decisions, to become meaningful, must be derived from a comparison between alternative economic models, or frameworks, under which society may collectively choose to operate.

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