This paper develops an efficiency-wage model of steady-state equilibrium with labor-augmenting technical progress, and uses the model to explore the long-run relationship between unemployment and growth. The rate of productivity growth is either specified exogenously or determined endogenously (from learning by doing). In both cases, we preserve key results of the Shapiro-Stiglitz efficiency-wage analysis without growth. Our model, however, also yields some striking new results. For inStance, an exogenous increase in the growth rate may raise the rate of efficiency-wage unemployment, and a once-for-a1l rise in the labor force may reduce the unemployment rate in the endogenous-growth case.
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Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number
00-01.
Find related papers by JEL classification: O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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