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Uneven Technical Progress and Unemployment

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Author Info

  • Gersbach, Hans

    ()
    (ETH Zurich)

  • Schniewind, Achim

    ()
    (Heidelberg University)

Abstract

In a two-sector model with real wage rigidity, we examine how technical progress in one sector affects unemployment in the whole economy. We show that aggregate unemployment decreases for uneven technical change in the case of Cobb-Douglas production functions. For every type of technical progress, however, there are also elasticities of substitution in production and utility functions leading to a rise in unemployment. Moreover, we identify polar cases when unemployment strongly decreases.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 478.

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Length: 25 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:iza:izadps:dp478

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Keywords: elasticities of substitution; uneven technical progress; unemployment;

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  1. Lindbeck,A. & Snower,D.J., 1995. "Restructuring Production and Work," Papers 602, Stockholm - International Economic Studies.
  2. Lindbeck, A. & Snower, D.J., 1996. "Reorganization of Firms and Labor Market Inequality," Papers 605, Stockholm - International Economic Studies.
  3. Hay, Donald A & Liu, Guy S, 1997. "The Efficiency of Firms: What Difference Does Competition Make?," Economic Journal, Royal Economic Society, vol. 107(442), pages 597-617, May.
  4. Cohen, Daniel & Saint-Paul, Gilles, 1994. "Uneven Technical Progress and Job Destructions," CEPR Discussion Papers 979, C.E.P.R. Discussion Papers.
  5. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
  6. David Dollar & Edward N. Wolff, 1993. "Competitiveness, Convergence, and International Specialization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262041359, December.
  7. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 477-94, July.
  8. Nickell, S.J., 1993. "Competition and Crporate Performance," Economics Series Working Papers 99155, University of Oxford, Department of Economics.
  9. Peretto, Pietro F., 2000. "Market power, Growth and Unemployment," Working Papers 00-21, Duke University, Department of Economics.
  10. Green, Alison & Mayes, David, 1991. "Technical Inefficiency in Manufacturing Industries," Economic Journal, Royal Economic Society, vol. 101(406), pages 523-38, May.
  11. Michael Burda, 2000. "Product Market Regulation and Labor Market Outcomes: How can Deregulation Create Jobs?," CESifo Working Paper Series 230, CESifo Group Munich.
  12. Gersbach, Hans, 2000. "Promoting Product Market Competition to Reduce Unemployment in Europe: An Alternative Approach?," Kyklos, Wiley Blackwell, vol. 53(2), pages 117-33.
  13. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
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