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Market Frictions, Technology Adoption and Economic Growth

Author Info

Listed author(s):
  • Been-Lon Chen

    (Institute of Economics; Academia Sinica, Taiwan)

  • Jie-Ping Mo

    (Institute of Economics; Academia Sinica, Taiwan)

  • Ping Wang

    ()

    (Department of Economics, Vanderbilt University)

Abstract

This paper develops an endogenous growth model with labor market matching and technology adoption. While labor market search and entry frictions lengthen technology diffusion, exogenous technology arrival may creatively destruct jobs in the short run. Such interrelationships give rise to multiple equilibria (global and local indeterminacy) under which a small autonomous technological improvement may create a large growth effect. We characterize the effects of exogenous technology arrival on equilibrium matching, adoption effort, wage and the overall dispersion of wages. Social inefficiency arises as a result of individuals' failure to account for free-rider, thick-matching, job-destruction effects in making technology adoption decision.

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File URL: http://www.accessecon.com/pubs/VUECON/vu00-w34.pdf
File Function: REvised version, 2000
Download Restriction: no

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0034.

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Date of creation: Aug 2000
Handle: RePEc:van:wpaper:0034
Contact details of provider: Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Keywords: Technological Diffusion; Labor Market Search and Matching; Endogenous Growth;

Other versions of this item:

Find related papers by JEL classification:
  • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
  • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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Cited by:

  1. Miyamoto, Hiroaki, 2010. "R&D, unemployment, and labor market policies," Japan and the World Economy, Elsevier, vol. 22(3), pages 198-205, August.
  2. Chen, Been-Lon, 2006. "Public capital, endogenous growth, and endogenous fluctuations," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 768-774, December.
  3. Been-Lon Chen & Shun-Fa Lee, 2005. "Congestible Public Goods and Indeterminacy in a Two-sector Endogenous Growth Model," IEAS Working Paper : academic research 05-A003, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  4. Chong-Kee Yip & Tsz-Nga Wong, 2014. "A Model of Technology Assimilation," 2014 Meeting Papers 144, Society for Economic Dynamics.
  5. Schiopu, Ioana, 2015. "Technology adoption, human capital formation and income differences," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 318-335.
  6. Batyra, Anna & de la Croix, David & Pierrard, Olivier & Sneessens, Henri R., 2013. "Declining bargaining power of workers and the rise of early retirement in Europe," GIAM Working Papers 13-6, Galatasaray University Economic Research Center.

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