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Unemployment and Endogenous Growth with Capital-Skill Complementarity

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  • Eva, MORENO-GALBIS

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and DELTA, Paris)

Abstract

We construct an endogenous growth intertemporal general equilibrium model with two types of jobs and two types of workers. We allow for job competition between high- and low skilled workers on the low-skilled segment of the labor market and for on-the-job search for high skilled workers. Matching processes are represented by matching functions à la Pissarides. Workers search intensities are endogenous. We distinguish between embodied and disembodied technological progress and endogenize them through a learning by doing process based on capital accumulation. Social returns to capital are imposed to be constant. Biased technological change is introduced via embodied technical progress and new technologies-skill complementarity relationship. The model reproduces quite well the producivity slowdown puzzle, the unemployment rate evolutions and the relative wage stability observed over the last decades. It suggests strong interactions between embodied technological progress, biased technological change, discouragement effects on job competition.

Suggested Citation

  • Eva, MORENO-GALBIS, 2004. "Unemployment and Endogenous Growth with Capital-Skill Complementarity," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2004001
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2004-1.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    skill mismatch; equilibrium unemployment; ladder effect; macro dynamics; endogneous growth; productivity slowdown; learning by doing;

    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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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