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Unemployment and Endogenous Growth with Capital-Skill Complementarity

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  • Eva, MORENO-GALBIS

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and DELTA, Paris)

Abstract

We construct an endogenous growth intertemporal general equilibrium model with two types of jobs and two types of workers. We allow for job competition between high- and low skilled workers on the low-skilled segment of the labor market and for on-the-job search for high skilled workers. Matching processes are represented by matching functions à la Pissarides. Workers search intensities are endogenous. We distinguish between embodied and disembodied technological progress and endogenize them through a learning by doing process based on capital accumulation. Social returns to capital are imposed to be constant. Biased technological change is introduced via embodied technical progress and new technologies-skill complementarity relationship. The model reproduces quite well the producivity slowdown puzzle, the unemployment rate evolutions and the relative wage stability observed over the last decades. It suggests strong interactions between embodied technological progress, biased technological change, discouragement effects on job competition.

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Bibliographic Info

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 2004001.

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Length: 44
Date of creation: 01 Feb 2004
Date of revision:
Handle: RePEc:ctl:louvir:2004001

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Related research

Keywords: skill mismatch; equilibrium unemployment; ladder effect; macro dynamics; endogneous growth; productivity slowdown; learning by doing;

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References

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  1. Machin, S. & Van Reenen, J., 1997. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," Papers 24, Centre for Economic Performance & Institute of Economics.
  2. Raouf BOUCEKKINE & Fernando DEL RIO & Omar LICANDRO, 2002. "Embodied Technological Change, Learning-by-Doing and the Productivity Slowdown," Economics Working Papers ECO2002/12, European University Institute.
  3. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  4. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 339-376, February.
  5. Dolado, Juan José & Jansen, Marcel & Jimeno, Juan F., 2002. "A Matching Model of Crowding-Out and On-the-Job Search (with an Application to Spain)," IZA Discussion Papers 612, Institute for the Study of Labor (IZA).
  6. Dolado, Juan J. & Felgueroso, Florentino & Jimeno, Juan F., 2000. "Youth labour markets in Spain: Education, training, and crowding-out," European Economic Review, Elsevier, vol. 44(4-6), pages 943-956, May.
  7. Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 269-300, November.
  8. Olivier, Pierrard & Henri R., Sneessens, 2002. "Low-Skilled Unemployment, Biased Technological Shocks and Job Competition," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 03 May 2002.
  9. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1995. "Long-Run Implications of Investment-Specific Technological Change," UWO Department of Economics Working Papers 9510, University of Western Ontario, Department of Economics.
  10. James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
  11. R.A. Brecher & Z. Chen & E.U. Choudhri, 1997. "Unemployment and Growth in the Long Run: An Efficiency-Wage Model with Optimal Savings," Carleton Economic Papers 00-01, Carleton University, Department of Economics, revised May 1999.
  12. Fabrice Collard & Raquel Fonseca & Rafael Muñoz, 2003. "Spanish Unemployment Persistence and the Ladder Effect," CSEF Working Papers 106, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  13. Postel-Vinay, Fabien, 1998. "Transitional dynamics of the search model with endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 22(7), pages 1091-1115, May.
  14. Pieter A. Gautier, 1999. "Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Heterogeneous Workers," Tinbergen Institute Discussion Papers 99-075/3, Tinbergen Institute.
  15. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
  16. Patacchini, Eleonora & Zenou, Yves, 2003. "Search Intensity, Cost of Living and Local Labor Markets in Britain," IZA Discussion Papers 772, Institute for the Study of Labor (IZA).
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  19. Bat COCKX & Muriel DEJEMEPPE, 2002. "Do the Higher Educated Unemployed Crowd out the Lower Educated Ones in a Competition for Jobs ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  20. Brauninger, Michael & Pannenberg, Markus, 2002. "Unemployment and productivity growth: an empirical analysis within an augmented Solow model," Economic Modelling, Elsevier, vol. 19(1), pages 105-120, January.
  21. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 477-94, July.
  22. Eva, MORENO GALBIS, 2002. "Changes in the skill structure of the labour force. An empirical application to the Spanish case," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  23. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  24. Felix Fitzroy & Michael Funke, 1994. "Capital-Skill Complementarity in West German Manufacturing," CRIEFF Discussion Papers 9408, Centre for Research into Industry, Enterprise, Finance and the Firm.
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