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Competition for Jobs in a Growing Economy and the Emergence of Dualism

  • Wasmer, E.

We aim to explain the rising share of short-term employment in Europe using a matching model with growth. We find that a slowdown in growth of labour productivity leads to the emergence of temporary (short-term) jobs and then explains their increasing share in total employment. Lower growth rates also shift the "Beveridge curve" to the right and weaken the bargaining position of workers. These effects generate a relation between growth and unemployment, which can be negative when the adverse effect of growth on wage setting dominates its positive effect on labour demand. In addition, higher population growth increases the share of temporary jobs and unemployment. Finally, the often blamed firing costs are found to be neutral when there is no floor on wages.

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Paper provided by DELTA (Ecole normale supérieure) in its series DELTA Working Papers with number 97-13.

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Date of creation: 1997
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Publication status: Published in The Economic Journal, July 1999, vol. 109, no 457, pp. 349-371
Handle: RePEc:del:abcdef:97-13
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