Sustainable Capitalism: Full-Employment Flexicurity Growth with Real Wage Rigidities
In this paper we present a model of flexicurity capitalism that exhibits a second labor market with the government as an employer of first resort, where all workers not employed by firms in the private sector find meaningful employment. We show that the model exhibits a unique interior steady state which is asymptotically stable under real wage adjustment dynamics of the type considered in Blanchard and Katz (1999), and under a type of Okun's Law that links the level of utilization of firms to their hiring and firing decision. The introduction of a company pension fund can be shown to contribute to the viability of the analyzed economic system. However, when credit is incorporated in the model, in place of savings-driven supply side fluctuations in economic activity, investment-driven demand side business cycle fluctuations (of a probably much more volatile type) can take place.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: Hans-Böckler-Straße 39, 40476 Düsseldorf|
Phone: +49 211 7778 234
Fax: +49 211 7778 4234
Web page: http://www.imk-boeckler.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Torben M. Andersen & Michael Svarer, 2007.
"Flexicurity: Labour Market Performance in Denmark,"
CESifo Economic Studies,
CESifo, vol. 53(3), pages 389-429, September.
- Torben M. Andersen & Michael Svarer, 2007. "Flexicurity – labour market performance in Denmark," Economics Working Papers 2007-09, Department of Economics and Business Economics, Aarhus University.
- Torben Andersen & Michael Svarer, 2007. "Flexicurity – Labour Market Performance in Denmark," CESifo Working Paper Series 2108, CESifo Group Munich.
- Flaschel, Peter & Greiner, Alfred, 2009. "Employment cycles and minimum wages. A macro view," Structural Change and Economic Dynamics, Elsevier, vol. 20(4), pages 279-287, December.
- Wilthagen, Ton, 1998. "Flexicurity: A new paradigm for labour market policy reform?," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 98-202, Social Science Research Center Berlin (WZB).
- Lawrence F. Katz & Olivier Blanchard, 1999.
"Wage Dynamics: Reconciling Theory and Evidence,"
American Economic Review,
American Economic Association, vol. 89(2), pages 69-74, May.
- H. Rose, 1967. "On the Non-Linear Theory of the Employment Cycle," Review of Economic Studies, Oxford University Press, vol. 34(2), pages 153-173.
When requesting a correction, please mention this item's handle: RePEc:imk:wpaper:5-2010. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Nemitz)
If references are entirely missing, you can add them using this form.