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Market Frictions, Technology Adoption and Economic Growth

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  • Been-Lon Chen

    (Institute of Economics; Academia Sinica, Taiwan)

  • Jie-Ping Mo

    (Institute of Economics; Academia Sinica, Taiwan)

  • Ping Wang

    ()
    (Department of Economics, Vanderbilt University)

Abstract

This paper develops an endogenous growth model with labor market matching and technology adoption. While labor market search and entry frictions lengthen technology diffusion, exogenous technology arrival may creatively destruct jobs in the short run. Such interrelationships give rise to multiple equilibria (global and local indeterminacy) under which a small autonomous technological improvement may create a large growth effect. We characterize the effects of exogenous technology arrival on equilibrium matching, adoption effort, wage and the overall dispersion of wages. Social inefficiency arises as a result of individuals' failure to account for free-rider, thick-matching, job-destruction effects in making technology adoption decision.

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File URL: http://www.accessecon.com/pubs/VUECON/vu00-w34.pdf
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0034.

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Date of creation: Aug 2000
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Handle: RePEc:van:wpaper:0034

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

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Keywords: Technological Diffusion; Labor Market Search and Matching; Endogenous Growth;

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Citations

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Cited by:
  1. Been-Lon Chen, 2007. "Multiple BGPs in a Growth Model with Habit Persistence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(1), pages 25-48, 02.
  2. Been-Lon Chen & Shun-Fa Lee, 2005. "Congestible Public Goods and Indeterminacy in a Two-sector Endogenous Growth Model," IEAS Working Paper : academic research 05-A003, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  3. Batyra, Anna & de la Croix, David & Pierrard, Olivier & Sneessens, Henri R., 2013. "Declining bargaining power of workers and the rise of early retirement in Europe," GIAM Working Papers 13-6, Galatasaray University Economic Research Center.
  4. Chen, Been-Lon, 2006. "Public capital, endogenous growth, and endogenous fluctuations," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 768-774, December.

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