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Monopolistic Competition and Different Wage Setting Systems

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  • José Ramón García
  • Valeri Sorolla

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Abstract

In this paper we match the static disequilibrium unemployment model without frictions in the labor market and monopolistic competition with an infinite horizon model of growth. We compare the wages set at the firm, sector and national (centralized) levels, their unemployment rates and growth of the economic variables, for the Cobb-Douglas production function, in order to see under wich conditions the inverse U hypothesis between unemployment and centralization of wage bargain is confirmed. We also analyze, in the three wage setting systems, the effect of an increase in the monopoly power on employment and growth.

Suggested Citation

  • José Ramón García & Valeri Sorolla, 2010. "Monopolistic Competition and Different Wage Setting Systems," UFAE and IAE Working Papers 839.10, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    • Handle: RePEc:aub:autbar:839.10
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    Cited by:

    1. José Ramón García & Valeri Sorolla, 2016. "The Calmfors-Driffill Hypothesis with Labour Market Frictions and Regulated Goods Markets," Working Papers 889, Barcelona Graduate School of Economics.

    More about this item

    Keywords

    Disequilibrium Unemployment; Monopolistic Competition; Growth; Wage Setting Systems.;

    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
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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