The Relation between Real Wage Rates and Employment: An Intertemporal General- Equilibrium Analysis
The paper studies the relation between real wage rates and employment in an intertemporal model in which expectations of subsequent real wage rates affect equilibrium capital investments and equilibrium interest rates in previous periods. Whether the wage-employment tradeoff is more favourable or less favourable in this model than in the static model with given capital depends on whether there is relatively more substitution in consumption or in production, or, more precisely, whether the elasticity of substitution in production is less than or greater than the inverse of the elasticity of marginal utility in consumption. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2004.
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Volume (Year): 5 (2004)
Issue (Month): 3 (08)
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- Kaas, Leo & von Thadden, Leopold, 2001.
"Unemployment, Factor Substitution, and Capital Formation,"
Discussion Paper Series 1: Economic Studies
2001,01, Deutsche Bundesbank, Research Centre.
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Sonderforschungsbereich 504 Publications
99-86, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Hellwig, Martin F & Irmen, Andreas, 2001. "Wage Growth, Productivity Growth, and the Evolution of Employment," CEPR Discussion Papers 2927, C.E.P.R. Discussion Papers.
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