How do Labor Market Institutions affect the Link between Growth and Unemployment: the case of the European countries
AbstractThis paper analyzes how the frictions in the labor market simultaneously affect the economic growth and the long run unemployment. To this goal, we develop a schumpeterian model of endogenous growth: agents have the choice between employment and R and D activities. Unemployment is caused by the wage-setting behavior of unions. We show that: (i) Increases in the labor costs or in the power of trade unions lead to higher unemployment and lower economic growth. (ii) Efficient bargain allows to increase employment, at the price of a lower growth rate. These theoretical predictions are consistent with the insights from our empirical analysis based on 183 European Regions, between 1980-2003
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Bibliographic InfoArticle provided by Cattaneo University (LIUC) in its journal The European Journal of Comparative Economics.
Volume (Year): 7 (2010)
Issue (Month): 2 (December)
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endogenous growth; unemployment; labor market institutions;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arnaud Chéron & Francois Langot & Eva Moreno‐Galbis, 2011. "Labour Market Institutions and Technological Employment," Economica, London School of Economics and Political Science, vol. 78(309), pages 159-186, January.
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