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Alfred Marshall Lecture: Growth, Unemployment, and Labor Market Policy

Author

Listed:
  • Dale T. Mortensen

    (Northwestern University,)

Abstract

The role of passive labor market policy as a possible reason for the run up in relative unemployment rates in Europe in the 1980s has been extensively studied. More recently the focus have shifted to lagging growth rates in Europe. The Lisbon strategy reflects these concerns by calling for reforms that ease market access, promote flexible labor markets, and simplify taxes and market regulation. The principal purpose of this paper is to build a simple model in which the possible effects of payroll taxes and employment protection policies on both unemployment and growth can be studied. The model is constructed of "off the shelf" parts found in the literatures on equilibrium unemployment and endogenous growth of the Schumpeterian variety. The model identifies channels though which both taxes and employment protection mandates can adversely affect growth though innovation. (JEL: E24, O40, J64, O31) Copyright (c) 2005 The European Economic Association.

Suggested Citation

  • Dale T. Mortensen, 2005. "Alfred Marshall Lecture: Growth, Unemployment, and Labor Market Policy," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 236-258, 04/05.
  • Handle: RePEc:tpr:jeurec:v:3:y:2005:i:2-3:p:236-258
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    Citations

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    Cited by:

    1. Carlsson, Mikael & Westermark, Andreas, 2011. "The New Keynesian Phillips Curve and staggered price and wage determination in a model with firm-specific labor," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 579-603, April.
    2. Gaetano Lisi, 2012. "Macroeconomic implications of the dynamics between power and trust: a theoretical formalisation of the ‘slippery slope’ framework," EERI Research Paper Series EERI_RP_2012_21, Economics and Econometrics Research Institute (EERI), Brussels.
    3. Miyamoto, Hiroaki, 2010. "R&D, unemployment, and labor market policies," Japan and the World Economy, Elsevier, vol. 22(3), pages 198-205, August.
    4. Gaetano Lisi & Maurizio Pugno, 2011. "Tax Morale, Entrepreneurship, and the Irregular Economy," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 5(2), pages 116-131, August.
    5. Stepanok, Ignat, 2018. "A North–South model of trade with search unemployment," European Economic Review, Elsevier, vol. 101(C), pages 546-566.
    6. repec:eee:streco:v:44:y:2018:i:c:p:34-45 is not listed on IDEAS
    7. Fabien Tripier, 2009. "Croissance et chômage à long terme," Économie et Prévision, Programme National Persée, vol. 189(3), pages 57-74.
    8. Gaetano Lisi, 2016. "Unemployment, underground economy and economic growth in a matching model of behavioural economics," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(2), pages 159-170, June.
    9. Parello, Carmelo Pierpaolo, 2011. "Labor market rigidity and productivity growth in a model of innovation-driven growth," Economic Modelling, Elsevier, vol. 28(3), pages 1058-1067, May.
    10. Lisi, G., 2011. "Entrepreneurship, On-the-job Search and Informal Jobs," Journal of the New Economic Association, New Economic Association, issue 9, pages 33-46.
    11. repec:spr:schmbr:v:18:y:2017:i:3:d:10.1007_s41464-017-0035-x is not listed on IDEAS
    12. Lisi, Gaetano, 2014. "The interaction between trust and power: Effects on tax compliance and macroeconomic implications," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 24-33.
    13. Carlsson Mikael & Westermark Andreas, 2008. "Monetary Policy under Downward Nominal Wage Rigidity," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-61, October.
    14. Gaetano Lisi & Maurizio Pugno, 2015. "A matching model of endogenous growth and underground firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 11(4), pages 347-369, December.
    15. Gaetano Lisi & Maurizio Pugno, 2010. "The Underground Economy in a Matching Model of Endogenous Growth," Working Papers 2010-07, Universita' di Cassino, Dipartimento di Scienze Economiche.
    16. Maciej Bukowski & Grzegorz Koloch & Piotr Lewandowski, 2008. "Shocks and rigidities as determinants of the CEE labor markets’ performance - a panel SVECM approach -," IBS Working Papers 2/2008, Instytut Badan Strukturalnych.
    17. Maciej Bukowski & Grzegorz Koloch & Piotr Lewandowski, 2013. "Shocks and rigidities as determinants of CEE labour markets’ performance," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(3), pages 553-581, July.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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