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Technological Progress and Optimum Labor Market Friction

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  • Mazumder, Debojyoti

Abstract

This paper presents a stylized economy with a labor market characterized by search friction. Endogenous technological progress is the only source of growth. A single good is produced with the only factor of production, labor. It works as input in both production and R&D. The model derives the optimal job match that leads towards maximum long run gain, and this optimal can be achieved even without changing the economy’s growth rate. Model proposes, higher payment in R&D is optimal for high growing countries and/or countries with high labor market efficiency. The results are robust with tax-financing government expenditure and under stochastic fluctuations.

Suggested Citation

  • Mazumder, Debojyoti, 2017. "Technological Progress and Optimum Labor Market Friction," MPRA Paper 92699, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92699
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    File URL: https://mpra.ub.uni-muenchen.de/92699/1/MPRA_paper_92699.pdf
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    Cited by:

    1. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2020. "Union, Efficiency of Labour and Endogenous Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 170-202, December.

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    More about this item

    Keywords

    Search and Matching friction; Labor Market; Technological progress;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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