‘Backyard’ technology and regulated wages in a neoclassical OLG growth model
This paper formally explores the joint roles played, on the one side, by the regulation of wages and, on the other side, by the existence of a “backyard” (or home) technology exploited by the unemployed people, in a standard neoclassical OLG growth model. The main findings are the following: 1) the introduction of a “binding” regulated wage fosters the capital accumulation and lead to a higher long term capital stock (and thus to higher output and welfare as well) in comparison with a competitive wage economy, provided that both the labour productivity at “home” and the capital weight in the firms technology are sufficiently high; 2) however, if the regulated wage is set at a too high level, the capital accumulation will be inferior to that of the competitive wage economy. These results, so far escaped closer scrutiny by economic growth literature, shed a new light on the effects of the regulation of wages and may have interesting policy implications.
|Date of creation:||01 Sep 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Via Cosimo Ridolfi, 10 - 56124 PISA|
Phone: +39 050 22 16 466
Fax: +39 050 22 16 384
Web page: http://www.ec.unipi.it
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.:
- Cahuc, Pierre & Michel, Philippe, 1996.
"Minimum wage unemployment and growth,"
European Economic Review,
Elsevier, vol. 40(7), pages 1463-1482, August.
- Charles I. Jones, 2003. "Growth, capital shares, and a new perspective on production functions," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
- Greenwood, J. & Hercowitz, Z., 1991.
"The Allocation of Capital and Time Over the Business Cycles,"
UWO Department of Economics Working Papers
9104, University of Western Ontario, Department of Economics.
- Greenwood, Jeremy & Hercowitz, Zvi, 1991. "The Allocation of Capital and Time over the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1188-214, December.
- Greenwood, J. & Hercowitz, Z., 1991. "The Allocation of Capital and Time Over the Business Cycle," RCER Working Papers 268, University of Rochester - Center for Economic Research (RCER).
- N. Gregory Mankiw & David Romer & David N. Weil, 1992.
"A Contribution to the Empirics of Economic Growth,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 107(2), pages 407-437.
- Eisner, Robert, 1988. "Extended Accounts for National Income and Product," Journal of Economic Literature, American Economic Association, vol. 26(4), pages 1611-84, December.
- Ravn, Morten O & Sorensen, Jan Rose, 1999. " Schooling, Training, Growth and Minimum Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 441-57, September.
- Greenwood, Jeremy & Seshadri, Ananth, 2005.
"Technological Progress and Economic Transformation,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 19, pages 1225-1273
- Jeremy Greenwood & Ananth Seshadri, 2002. "Technological Progress and Economic Transformation," Economie d'Avant Garde Research Reports 3, Economie d'Avant Garde.
- Jeremy Greenwood, 2003. "Technological Progress and Economic Transformation," Annual Meeting Plenary 2003-2, Society for Economic Dynamics.
- Jeremy Greenwood & Ananth Seshadri, 2004. "Technological Progress and Economic Transformation," NBER Working Papers 10765, National Bureau of Economic Research, Inc.
- Jess Benhabib & Richard Rogerson & Randall Wright, 1991.
"Homework in macroeconomics: household production and aggregate fluctuations,"
135, Federal Reserve Bank of Minneapolis.
- Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991. "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1166-87, December.
- Lang, Kevin, 1987. "Pareto Improving Minimum Wage Laws," Economic Inquiry, Western Economic Association International, vol. 25(1), pages 145-58, January.
When requesting a correction, please mention this item's handle: RePEc:pie:dsedps:2008/74. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.