The controversy about labour supply and monetary wages in General Theory: new ways?

Abstract

The paper argues that the full acceptance of the principle of effective demand is hampered by the meager developments of a labour supply function. This function is able to generate typical Keynesian results, even when grounded in behavioral micro-optimization. It also identifies the Hoover (1995) model as the best available way to develop a research agenda in this field. This model is perfectly compatible with a heterodox interpretation of the General Theory theoretical framework.

Keywords:
Macroeconomy; Principle of effective demand; Labour supply; Monetary wages; Hoover’s model