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Can Market Power influence Employment, Wage Inequality and Growth?

  • Alberto BUCCI

    ([n.a.])

  • Fabio FIORILLO

    ()

    (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)

  • Stefano STAFFOLANI

    ()

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

We introduce an efficiency-wage mechanism into an innovation-driven growth model. Due to informational problems, the labour market is segmented and homogeneous workers may be employed either in a non-competitive intermediate sector or in a competitive research one. We analyse the impact that variations in the monopoly power of the intermediate firms may have on unemployment, wage inequality and growth. We find that the lower the product market competition in the intermediate sector, the higher the research employment, the lower the intermediate sector employment, the higher the aggregate growth rate. Growth and inequality are negatively correlated whereas growth and unemployment are positively correlated. The last two results are obtained through numerical simulations.

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Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 141.

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Length: 21
Date of creation: Oct 2000
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Handle: RePEc:anc:wpaper:141
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