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Market frictions, technology adoption and economic growth

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  • Chen, Been-Lon
  • Mo, Jie-Ping
  • Wang, Ping

Abstract

This paper develops an endogenous growth model with labor market matching and technology adoption. While labor market search and entry frictions lengthen technology diffusion, exogenous technology arrival may creatively destruct jobs in the short run. Such interrelationships give rise to multiple equilibria (global and local indeterminacy) under which a small autonomous technological improvement may create a large growth effect. We characterize the effects of exogenous technology arrival on equilibrium matching, adoption effort, wage and the overall dispersion of wages. Social inefficiency arises as a result of individuals' failure to account for free-rider, thick-matching, job-destruction effects in making technology adoption decision.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 26 (2002)
Issue (Month): 11 (September)
Pages: 1927-1954

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Handle: RePEc:eee:dyncon:v:26:y:2002:i:11:p:1927-1954

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Cited by:
  1. Batyra, Anna & de la Croix, David & Pierrard, Olivier & Sneessens, Henri R., 2013. "Declining bargaining power of workers and the rise of early retirement in Europe," GIAM Working Papers 13-6, Galatasaray University Economic Research Center.
  2. Been-Lon Chen, 2007. "Multiple BGPs in a Growth Model with Habit Persistence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(1), pages 25-48, 02.
  3. Chen, Been-Lon, 2006. "Public capital, endogenous growth, and endogenous fluctuations," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 768-774, December.
  4. Been-Lon Chen & Shun-Fa Lee, 2005. "Congestible Public Goods and Indeterminacy in a Two-sector Endogenous Growth Model," IEAS Working Paper : academic research 05-A003, Institute of Economics, Academia Sinica, Taipei, Taiwan.

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