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Unemployment and Endogenous Growth

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  • Anton B. T. M. Van Schaik
  • Henri L. F. De Groot

Abstract

In this paper we develop a two-sector endogenous growth model with a dual labour market, based on efficiency wages. Growth is driven by intentional R&D performed in the high-tech and high-wage sector. How a change in rivalry among firms affects simultaneously growth and unemployment is examined. On the one hand, an increase of the elasticity of substitution between the product varieties of different high-tech firms reduces market power and leads to higher growth but reduces job prospects. On the other hand, if barriers to entry exist, an increase of the number of rivals in the market (due to removal of entry barriers) leads to lower growth, whereas the effect on aggregate employment is ambiguous. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd. 1998.

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Bibliographic Info

Article provided by CEIS in its journal Labour.

Volume (Year): 12 (1998)
Issue (Month): 2 (07)
Pages: 189-219

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Handle: RePEc:bla:labour:v:12:y:1998:i:2:p:189-219

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Cited by:
  1. Groot, H.L.F. de & Schaik, A.B.T.M. van, 1997. "Unemployment and catching up: Europe vis à vis the USA," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73836, Tilburg University.
  2. Carmeci, Gaetano & Mauro, Luciano, 2003. "Imperfect labor market and convergence: theory and evidence for some OECD countries," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 837-856, November.
  3. Vesna Stavrevska, 2011. "The efficiency wages perspective to wage rigidity in the open economy: a survey," International Journal of Manpower, Emerald Group Publishing, vol. 32(3), pages 273-299, July.
  4. Giovanni Dosi & Giorgio Fagiolo & Roberto Gabriele, 2004. "Towards an Evolutionary Interpretation of Aggregate Labor Market Regularities," LEM Papers Series 2004/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  5. Alberto Bucci & Fabio Fiorillo & Stefano Staffolani, 2003. "Can Market Power Influence Employment, Wage Inequality and Growth?," Metroeconomica, Wiley Blackwell, vol. 54(2-3), pages 129-160, 05.
  6. Mondal, Debasis & Gupta, Manash Ranjan, 2008. "Intellectual property rights protection and unemployment in a North South model: A theoretical analysis," Economic Modelling, Elsevier, vol. 25(3), pages 463-484, May.
  7. Lutz G. Arnold, 2006. "Does the Choice between Wage Inequality and Unemployment Affect Productivity Growth?," German Economic Review, Verein für Socialpolitik, vol. 7, pages 87-112, 02.
  8. Martin Zagler, 2011. "Endogenous Growth, Efficiency Wages, and Persistent Unemployment," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 34-42, April.
  9. Jose Maria Ramos Parreno & Fernando Sanchez Losada, 1999. "The role of unions in an endogenous growth model with human capital," Working Papers in Economics 57, Universitat de Barcelona. Espai de Recerca en Economia.
  10. Leopold Soegner & Alfred Stiassny, 2000. "A Cross-Country Study on Okun's Law," Working Papers geewp13, Vienna University of Economics Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  11. Ziesemer,Thomas, 2002. "Monopolistic Competition, Search Unemployment, and Macroeconomics," Research Memorandum 021, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  12. Shu-Chen Chang, 2005. "The dynamic interactions among foreign direct investment, economic growth, exports and unemployment: evidence from Taiwan," Economic Change and Restructuring, Springer, vol. 38(3), pages 235-256, December.
  13. Meckl, Jürgen, 1999. "Efficiency-wage unemployment and endogenous growth," Discussion Papers, Series 1 295, University of Konstanz, Department of Economics.
  14. Horst Feldmann, 2013. "Technological unemployment in industrial countries," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1099-1126, November.
  15. Campbell leith & Chol-Won Li, 2001. "Unemployment and the Productivity Slowdown: A Labour Supply Perspective," Working Papers 2001_13, Business School - Economics, University of Glasgow.
  16. Raurich, Xavier & Sorolla, Valeri, 2014. "Growth, unemployment and wage inertia," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 42-59.
  17. Schaik, A.B.T.M. van & Groot, H.L.F. de, 2000. "Unemployment, growth and efficiency wages," Open Access publications from Tilburg University urn:nbn:nl:ui:12-83963, Tilburg University.
  18. Meckl, Jurgen, 2004. "Accumulation of technological knowledge, wage differentials, and unemployment," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 65-82, March.

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