The Relationship between the Indivisibility of Labor, the Wage Equation and the Hazard Rate of Unemployment

The paper attempts to build a wage equation, bringing in the concept of indivisibility of labor, and aims at finding out how complete wage equation reduces the immediate unemployment rate or the hazard rate of unemployment.This paper formally derives the standard wage equation considering all the entitlements of labor viz. (i) normal wages, (ii) interest and (iii) rent of ability. The last part is the fixed factor.The equation has been derived assuming the labor is an indivisible factor. The findings of the paper show that if labor has been considered indivisible the wage equation followed by this will reduce the immediate unemployment rate