Schumpeterian growth and the political economy of employment protection
AbstractThis paper analyzes the differing attitudes concerning political support for employment protection between skilled and unskilled workers in a quality-ladder growth model. Creative destruction through innovation results in “Schumpeterian unemployment” of unskilled workers. By voting on firing costs, unskilled workers consider a trade-off between the benefit of fewer unemployment spells and the cost of lower quality growth of consumer goods. Skilled workers, although not threatened by unemployment, may vote for even larger firing costs. Alleviating one labor market rigidity by increasing the matching efficiency between firms and unskilled workers aggravates another rigidity by creating political support for additional firing costs. Copyright Springer-Verlag 2005
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Bibliographic InfoArticle provided by Springer in its journal Journal of Economics.
Volume (Year): 86 (2005)
Issue (Month): 1 (December)
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Web page: http://www.springerlink.com/link.asp?id=108909
Non-Scale Growth; Schumpeterian Unemployment; Firing Costs; J63; O33; E24; D72;
Other versions of this item:
- Wolf-Heimo Grieben, 2005. "Schumpeterian growth and the political economy of employment protection," Journal of Economics, Springer, vol. 10(1), pages 77-118, December.
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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