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Can Market Power influence Employment, Wage Inequality and Growth ?

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  • Bucci, Alberto

    (Università di Bologna, Sede di Rimini, Facoltà di Economia; UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Fiorillo, Fabio

    (Aniversità di Ancona, Dipartimento di Economia)

  • Staffolani, Stefano

    (Aniversità di Ancona, Dipartimento di Economia)

Abstract

We introduce an efficiency-wage mechanism into an innovation-driven growth model. Due to informational problems, the labour market is segmented and homogeneous workers may be employed either in a non-competitive intermediate sector or in a competitive research one. We analyse the impact that variations in the monopoly power of the intermediate firms may have on unemployment, wage inequality and growth. We find that the lower the product market competition in the intermediate sector, the higher the research employment, the lower the intermediate sector employment, the higher the aggregate growth rate. Growth and inequality are negatively correlated whereas growth and unemployment are positively correlated. The last two results are obtained through numerical simulations.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2000030.

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Length: 26
Date of creation: 01 Jan 2001
Date of revision:
Handle: RePEc:ctl:louvir:2000030

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Keywords: Efficiency wages; research and development; endogenous growth; market power;

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Cited by:
  1. Nicola MATTEUCCI & Alessandro STERLACCHINI, 2003. "ICT and Employment Growth in Italian Industries," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 193, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  2. Stefania BUSSOLETTI & Roberto ESPOSTI, 2004. "Regional Convergence, Structural Funds and the Role of Agricolture in the EU. A Panel-Data Approach," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 220, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Ugo Fratesi, 2003. "Innovation Diffusion and the Evolution of Regional Disparities," ERSA conference papers ersa03p327, European Regional Science Association.
  4. Elvio MATTIOLI, 2003. "The measurement of coherence in the evaluation of criteria and its effects or ranking problems illustrated using a multicriteria decision method," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 199, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  5. Renato BALDUCCI & Stefano STAFFOLANI, 2003. "Short-Run Bargaining, Factors Shares and Growth," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 188, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  6. Marcello MESSORI & Alberto ZAZZARO, 2004. "Monetary profits within the circuit: Ponzi finance oer "mors tua, vita mea"?," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 200, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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