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Workplaces in the Primary Economy and Wage Pressure in the Secondary Labor Market Author info | Abstract | Publisher info | Download info | Related research | Statistics Josef Falkinger
Volker Grossmann
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This paper develops a two-sector general-equilibrium model in which firms in the primary economy have to create workplaces prior to production and product-market competition. For this, we introduce the endogenous sunk-cost approach with two-stage decisions of firms from IO in the macro labor literature. By hypothesizing that technological change has lowered marginal costs but has raised nonproduction requirements for providing workplaces, we are able to explain downsizing of low-skilled jobs in the primary economy despite wage flexibility ex ante. This leads to more accentuated labor-market segmentation, i.e., an increase in wage pressure in the secondary economy.
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Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics .
Volume (Year): 159 (2003)
Issue (Month): 3 (September)
Pages: 523-
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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200309)159:3_523:witpea_2.0.tx_2-cContact details of provider: Web page: http://www.mohr.de/jite
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Find related papers by JEL classification: D20 - Microeconomics - - Production and Organizations - - - General J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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references Cited by : (explanations , 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.)
Volker Grossmann, 2005.
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Egger, Hartmut & Grossmann, Volker, 2004.
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