On the Effects of Wage Pressure on the Unemployment Rate and Capital Share
The purpose of this paper is to understand the behaviour of the capital share and the unemployment rate in Europe over the past quarter of a century. We consider a model with monopolistic competition, increasing returns and an imperfect labour market, assuming that the elasticity between capital and labour is less than unity. Previous works have generally assumed constant returns to scale. Our results offer an important conclusion, namely that increased wage pressure will increase the unemployment rate and the capital share even though the latter initially decreases, which fits the stylized facts about the studied economies. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2006.
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Volume (Year): 7 (2006)
Issue (Month): (November)
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References listed on IDEAS
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.:
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"Unemployment, Factor Substitution, and Capital Formation,"
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- Leo Kaas & Leopold von Thadden, 2001. "Unemployment, Factor Substitution, and Capital Formation," Vienna Economics Papers 0102, University of Vienna, Department of Economics.
- repec:cup:cbooks:9780521626163 is not listed on IDEAS
- Henriksen, E & Knarvik, K.H.M. & Steen, F., 2001.
"Economies of Scale in European Manufacturing Revisited,"
12/2001, Norwegian School of Economics and Business Administration-.
- Henriksen, Espen & Steen, Frode & Ulltveit-Moe, Karen-Helene, 2001. "Economies of Scale in European Manufacturing Revisited," CEPR Discussion Papers 2896, C.E.P.R. Discussion Papers.
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- Samuel Bentolila & Gilles Saint Paul, 1999. "Explaining movements in the labor share," Economics Working Papers 374, Department of Economics and Business, Universitat Pompeu Fabra.
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