Dual Labor Market And Endogenous Fluctuations
AbstractWe study the influence of wage differential on the emergence of endogenous fluctuations. In this way, we introduce a dual labor market, based on the Shapiro Stiglitz efficiency wage theory in an overlapping generations model. We show that wage inequality is a source of endogenous fluctuations. Indeed, a sufficiently strong wage differential leads to the occurrence of cycles of period 2 and local indeterminacy. Moreover, in contrast to several existing contributions, these results depend neither on increasing returns to scale nor on the degree of capital labor substitution.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Macroeconomic Dynamics.
Volume (Year): 9 (2005)
Issue (Month): 03 (June)
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Other versions of this item:
- Francesco De Palma & Thomas Seegmuller, 2005. "Dual Labor Market and Endogenous Fluctuations," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00194165, HAL.
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