Industrialization Jobs Creation and Wages Incentives
An optimizing representative firm pays efficiency wages to skilled workers to produce technological innovations, which are assumed to be of labor saving type, affecting negatively the hiring rate of unskilled workers. The results are: i) The efficiency wage of skilled workers is determined by the Solow condition; ii) There is underemployment of unskilled workers whenever the added value of innovations is greater than the opportunity cost of skilled workers’ wages; iii) The optimal level of technology is independent of technological parameters; iv) The employment of skilled workers increases with the level of technology and decreases with the efficiency wage; v) The employment of unskilled workers is not necessarily negatively affected by technological innovations in the steady state.
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- Jellal, Mohamed & Zenou, Yves, 2000.
"A dynamic efficiency wage model with learning by doing,"
Elsevier, vol. 66(1), pages 99-105, January.
- Jellal, Mohamed & Zenou, Yves, 2000. "A dynamic efficiency wage model with learning by doing," MPRA Paper 38513, University Library of Munich, Germany.
- Lin, Chung-cheng & Lai, Ching-chong, 1994. "The turnover costs and the Solow condition in an efficiency wage model with intertemporal optimization," Economics Letters, Elsevier, vol. 45(4), pages 501-505, August.
- Faria, Joao Ricardo, 2000. "Supervision and effort in an intertemporal efficiency wage model: the role of the Solow condition," Economics Letters, Elsevier, vol. 67(1), pages 93-98, April.
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