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Innovation and Sectoral Employment: A Trade-Off between Compensation Mechanisms

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Abstract

The question whether technological progress displaces employment or whether technological advance is beneficial for the level of employment has been in the core of economic dispute for over two centuries. The beneficial might be achieved by several compensation mechanisms within the economic system. In this paper we categorize these compensation mechanisms into two basic categories that reflect the different nature of the ideas ruling the compensation. We discriminate the mechanisms employment despite of innovation from employment via innovation. In the context of new innovation economics we model an artificial industry implementing both compensation mechanisms. Simulation analysis is used to examine the short run and the long run properties of the model. There we focus on the influence of wage restraint policy on the functioning of the compensation mechanism.

Suggested Citation

  • Bernd Ebersberger & Andreas Pyka, 2000. "Innovation and Sectoral Employment: A Trade-Off between Compensation Mechanisms," Discussion Paper Series 191, Universitaet Augsburg, Institute for Economics.
  • Handle: RePEc:aug:augsbe:0191
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    File URL: https://www.wiwi.uni-augsburg.de/vwl/institut/paper/191.pdf
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    References listed on IDEAS

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    1. Sahal, Devendra, 1985. "Technological guideposts and innovation avenues," Research Policy, Elsevier, vol. 14(2), pages 61-82, April.
    2. Cooper, Russell & Haltiwanger, John, 1993. "The Aggregate Implications of Machine Replacement: Theory and Evidence," American Economic Review, American Economic Association, vol. 83(3), pages 360-382, June.
    3. Cantner, Uwe & Pyka, Andreas, 1998. "Absorbing Technological Spillovers: Simulations in an Evolutionary Framework," Industrial and Corporate Change, Oxford University Press, vol. 7(2), pages 369-397, June.
    4. Dosi, Giovanni, 1993. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, vol. 22(2), pages 102-103, April.
    5. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
    6. Klevorick, Alvin K. & Levin, Richard C. & Nelson, Richard R. & Winter, Sidney G., 1995. "On the sources and significance of interindustry differences in technological opportunities," Research Policy, Elsevier, vol. 24(2), pages 185-205, March.
    7. Leonello Tronti & Paola Tanda, 1998. "Technical Progress, Life of Capital and Employment," LABOUR, CEIS, vol. 12(2), pages 389-424, July.
    8. Kleinknecht, Alfred, 1998. "Is Labour Market Flexibility Harmful to Innovation?," Cambridge Journal of Economics, Oxford University Press, vol. 22(3), pages 387-396, May.
    9. Katsoulacos, Y., 1984. "Product innovation and employment," European Economic Review, Elsevier, vol. 26(1-2), pages 83-108.
    10. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3, Specia), pages 783-832.
    11. Joseph E. Stiglitz, 1993. "Endogenous Growth and Cycles," NBER Working Papers 4286, National Bureau of Economic Research, Inc.
    12. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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