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Long‐Run Economic Performance and the Labor Market

Author

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  • Alberto Alonso
  • Cristina Echevarria
  • Kien C. Tran

Abstract

This article uses a simple variation of the Solow model to study the interrelations between economic growth and the labor market. We show, both analytically and empirically, that income and capital per worker in the steady state depend positively on flexibility of the labor market; that the steady‐state unemployment rate depends positively on the rate of population growth and the productivity growth rate and negatively on the savings rate and flexibility of the labor market; and, finally, that labor market flexibility affects convergence toward steady state.

Suggested Citation

  • Alberto Alonso & Cristina Echevarria & Kien C. Tran, 2004. "Long‐Run Economic Performance and the Labor Market," Southern Economic Journal, John Wiley & Sons, vol. 70(4), pages 905-919, April.
    • Handle: RePEc:wly:soecon:v:70:y:2004:i:4:p:905-919
    DOI: 10.1002/j.2325-8012.2004.tb00611.x
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    References listed on IDEAS

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    Cited by:

    1. Canale, Rosaria Rita & Liotti, Giorgio & Musella, Marco, 2022. "Labour market flexibility and workers’ living conditions in Europe," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 441-450.

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