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Employment, fiscal Policy and Oligopsonistic Labour Market

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  • Toshiki Tamai

    () (Kinki University)

Abstract

This paper presents an investigation of the dynamic effects of fiscal policy in an inter-temporal optimisation model with an oligopsonistic labour market. In an oligopsonistic labour market, fiscal policy expands employment through a shift of labour demand and supply curves. Fiscal policy has a positive effect on physical capital. Consequently, fiscal expansion stimulates not only employment but also aggregate output. However, an increase in government spending that does not generate benefits cannot improve welfare. The extended model provides conditions for justification of active fiscal policy.

Suggested Citation

  • Toshiki Tamai, 2009. "Employment, fiscal Policy and Oligopsonistic Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 12(3), pages 321-337.
  • Handle: RePEc:ozl:journl:v:12:y:2009:i:3:p:321-337
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    More about this item

    Keywords

    Demand and Supply of Labor: General; General Aggregative Models: General; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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