Efficiency-wage unemployment and endogenous growth
AbstractThis paper examines positive and normative implications of efficiency-wage induced unemployment within a model of endogenous growth. Sectorspecific impacts of the wage rate on labor efficiency establish a correlation between the growth rate and the rate of unemployment. The sign of this correlation is shown to be given by the intersectoral wage differential. Despite the existence of unemployment, decisive positive properties of the full-employment model are preserved. However, welfare implications of the full-employment model may be reversed. The optimal policy can be to reduce growth, while at the same time raising unemployment. --
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Bibliographic InfoPaper provided by University of Konstanz, Department of Economics in its series Discussion Papers, Series 1 with number 295.
Date of creation: 1999
Date of revision:
innovation-based growth; unemployment; efficiency wages;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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