Capital scarcities as a reason for high unemployment in the European Union
AbstractThis paper argues that scarcities for non-transferable fixed-supply goods such as land, infrastucture and social capital, may affect European unemployment in two, mutually enforcing, ways. Firstly the existence of minimum non-transferable capital requirements per worker implies that in a growing economy, workers must have ever higher productivities to obtain any wages at all. Secondly, the fact that non- transferable goods are not only production inputs, but are also indispensable consumer goods, increases the price of the non-tranferable goods even higher, thereby increasing again the minimum wages one needs to survive. Furthermore, in a simple general equilibrium model I show that the presence of high-productivity workers will decrease the wages (and job-opportunities) of other workers and increase the minimum wages necessary to survive. Unemployment and minimum living costs are also increased by an increase in population, by an increase in the relative productivity of capital, by an increase in the dispersion of labour quality and by an increase in the importance of capital goods for consumption.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 9706002.
Date of creation: 05 Jun 1997
Date of revision:
Note: sw 2.01 file, readable with LaTeX
Contact details of provider:
Web page: http://188.8.131.52
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Smith, B.D., 1990.
"Sectoral Employment And Cyclical Fluctuations In An Adverse Selection Model,"
RCER Working Papers
218, University of Rochester - Center for Economic Research (RCER).
- Smith, Bruce D, 1995. "Sectoral Employment and Cyclical Fluctuations in an Adverse Selection Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 261-81, May.
- David Card & Alan Krueger, 1993.
"Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania,"
694, Princeton University, Department of Economics, Industrial Relations Section..
- Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September.
- David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
- Rebecca M. Blank, 1994. "Social Protection versus Economic Flexibility: Is There a Trade-Off?," NBER Books, National Bureau of Economic Research, Inc, number blan94-1.
- Gary Burtless, 1995. "International Trade and the Rise in Earnings Inequality," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 800-816, June.
- Akerlof, George A, 1981. "Jobs as Dam Sites," Review of Economic Studies, Wiley Blackwell, vol. 48(1), pages 37-49, January.
- Teulings,Coen & Hartog,Joop, 2008.
"Corporatism or Competition?,"
Cambridge University Press, number 9780521049399, December.
- Hargreaves Heap, Shaun P, 1994. " Institutions and (Short-Run) Macroeconomic Performance," Journal of Economic Surveys, Wiley Blackwell, vol. 8(1), pages 35-56, March.
- Gottfries, N. & Mccormick, B., 1990.
"Discrimination And Open Unemployment In A Segmented Labour Market,"
460, Stockholm - International Economic Studies.
- Gottfries, Nils & McCormick, Barry, 1995. "Discrimination and open unemployment in a segmented labour market," European Economic Review, Elsevier, vol. 39(1), pages 1-15, January.
- Gottfries, N. & McCormick, B., 1993. "Discrimination and open unemployment in a segmented labour market," Discussion Paper Series In Economics And Econometrics 9320, Economics Division, School of Social Sciences, University of Southampton.
- Sattinger, Michael, 1995. "Search and the Efficient Assignment of Workers to Jobs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 283-302, May.
- Saint-Paul, Gilles, 1992.
"The High Unemployment Trap,"
CEPR Discussion Papers
670, C.E.P.R. Discussion Papers.
- Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
- Hoel, Michael, 1990. " Local versus Central Wage Bargaining with Endogenous Investments," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(3), pages 453-69.
- Frijters, Paul & Gregory, Bob, 2006.
"From Golden Age to Golden Age: Australia's "Great Leap Forward"?,"
IZA Discussion Papers
2068, Institute for the Study of Labor (IZA).
- Paul Frijters & Robert Gregory, 2006. "From Golden Age to Golden Age: Australia's 'Great Leap Forward'?," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 207-224, 06.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.