Egalitarianism and Growth
AbstractAre competitive wage premia an obstacle to growth? The answer of the architects of the Scandinavian 'model' in the 1950s and 1960s was in the affirmative. By punishing expansive and growth enhancing sectors of the economy, competitive wage premia imposed an unwarranted drag on the rate of structural change. The authors formalize this intuition using a two-sector endogenous growth model, considering both open and closed economy cases. They also show that egalitarian pay compression, combined with active labor market policies, works in the same way as an industrial policy of subsidizing sunrise industries. Copyright 1993 by The editors of the Scandinavian Journal of Economics.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.
Volume (Year): 95 (1993)
Issue (Month): 4 (December)
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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
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