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A Schumpeterian model of equilibrium unemployment and labor turnover

Author

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  • M. Fuat Sener

    (Department of Economics, Social Sciences Building, Union College, Schenectady, NY 12308, USA)

Abstract

This paper constructs a general equilibrium model of equilibrium unemployment by combining an endogenous growth model with a variant of equilibrium search theory. The analysis offers two explanations for the causes of widening wage gap between skilled and less-skilled labor, and rising unemployment rate among the less skilled: technological change in the form of an increase in the size of innovations or skilled labor saving technological change in R&D activity. In addition, the model identifies two distinct effects of faster technological progress on the aggregate unemployment rate. First, it increases the rate of labor turnover and therefore increases the aggregate unemployment rate - the creative destruction effect. Second, it creates R&D jobs, which offer workers complete job security, and consequently reduces the aggregate unemployment rate - the resource reallocation effect.

Suggested Citation

  • M. Fuat Sener, 2000. "A Schumpeterian model of equilibrium unemployment and labor turnover," Journal of Evolutionary Economics, Springer, vol. 10(5), pages 557-583.
    • Handle: RePEc:spr:joevec:v:10:y:2000:i:5:p:557-583
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    Cited by:

    1. Angus C. Chu & Guido Cozzi & Haichao Fan & Yuichi Furukawa, 2021. "Inflation, Unemployment, and Economic Growth in a Schumpeterian Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 874-909, July.

    More about this item

    Keywords

    Frictional unemployment - Wage inequality - Endogenous growth - Job-matching;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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