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Market Frictions, Technology Adoption and Economic Growth

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Author Info
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)

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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.vanderbilt.edu/econ/wparchive/workpaper/vu00-w34.pdf
File Format: application/pdf
File Function: REvised version, 2000
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Publisher Info
Paper provided by Department of Economics, Vanderbilt University in its series Working Papers with number 0034.

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Date of creation: Aug 1999
Date of revision: Aug 2000
Handle: RePEc:van:wpaper:0034

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

Other versions of this item:

Find related papers by JEL classification:
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

References listed on IDEAS
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    Other versions:
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    Other versions:
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  19. Bond, Eric W. & Wang, Ping & Yip, Chong K., 1996. "A General Two-Sector Model of Endogenous Growth with Human and Physical Capital: Balanced Growth and Transitional Dynamics," Journal of Economic Theory, Elsevier, vol. 68(1), pages 149-173, January. [Downloadable!] (restricted)
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