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The relation between the speed of demand saturation and the dynamism of the labour market

  • Kurose, Kazuhiro
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    The purpose of this paper is to examine the medium run effect of the speed of demand saturation on the dynamism of the labour market which involves factors such as the growth of employment and real wage rate, using a computer simulation of the stochastically multi-sectoral pure labour model with a logistic demand function. From the simulation, we obtain the evolutions of the expectation of the employment rate and the real wage rate, supposing three cases where the speed of demand saturation for a product that stochastically emerges is, ceteris paribus, different. As a result, it is demonstrated that the faster growth of demand for a product that emerges stochastically accelerates the growth of employment, but decelerates the growth of real wage rate. The result depends on the heterogeneity of the agents, which is neglected by mainstream economics.

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    Article provided by Elsevier in its journal Structural Change and Economic Dynamics.

    Volume (Year): 20 (2009)
    Issue (Month): 2 (June)
    Pages: 151-159

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    Handle: RePEc:eee:streco:v:20:y:2009:i:2:p:151-159
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/525148

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