Capital scarcities as a reason for high unemployment in the European Union
This paper argues that scarcities for non-transferable fixed-supply goods such as land, infrastucture and social capital, may affect European unemployment in two, mutually enforcing, ways. Firstly the existence of minimum non-transferable capital requirements per worker implies that in a growing economy, workers must have ever higher productivities to obtain any wages at all. Secondly, the fact that non- transferable goods are not only production inputs, but are also indispensable consumer goods, increases the price of the non-tranferable goods even higher, thereby increasing again the minimum wages one needs to survive. Furthermore, in a simple general equilibrium model I show that the presence of high-productivity workers will decrease the wages (and job-opportunities) of other workers and increase the minimum wages necessary to survive. Unemployment and minimum living costs are also increased by an increase in population, by an increase in the relative productivity of capital, by an increase in the dispersion of labour quality and by an increase in the importance of capital goods for consumption.
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.:
- Soskice, David, 1990. "Wage Determination: The Changing Role of Institutions in Advanced Industrialized Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 6(4), pages 36-61, Winter.
- Rebecca M. Blank, 1994. "Social Protection versus Economic Flexibility: Is There a Trade-Off?," NBER Books, National Bureau of Economic Research, Inc, number blan94-1, June.
- David Card & Alan B. Krueger, 1993.
"Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania,"
NBER Working Papers
4509, National Bureau of Economic Research, Inc.
- Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September.
- David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
- Gottfries, N. & McCormick, B., 1993.
"Discrimination and open unemployment in a segmented labour market,"
Discussion Paper Series In Economics And Econometrics
9320, Economics Division, School of Social Sciences, University of Southampton.
- Gottfries, Nils & McCormick, Barry, 1995. "Discrimination and open unemployment in a segmented labour market," European Economic Review, Elsevier, vol. 39(1), pages 1-15, January.
- Gottfries, N. & Mccormick, B., 1990. "Discrimination And Open Unemployment In A Segmented Labour Market," Papers 460, Stockholm - International Economic Studies.
- Smith, Bruce D, 1995.
"Sectoral Employment and Cyclical Fluctuations in an Adverse Selection Model,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 261-81, May.
- Smith, B.D., 1990. "Sectoral Employment And Cyclical Fluctuations In An Adverse Selection Model," RCER Working Papers 218, University of Rochester - Center for Economic Research (RCER).
- Saint-Paul, Gilles, 1992.
"The High Unemployment Trap,"
CEPR Discussion Papers
670, C.E.P.R. Discussion Papers.
- Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
- repec:cup:cbooks:9780521590730 is not listed on IDEAS
- Akerlof, George A, 1981. "Jobs as Dam Sites," Review of Economic Studies, Wiley Blackwell, vol. 48(1), pages 37-49, January.
- Hoel, Michael, 1990. " Local versus Central Wage Bargaining with Endogenous Investments," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(3), pages 453-69.
- Hargreaves Heap, Shaun P, 1994. " Institutions and (Short-Run) Macroeconomic Performance," Journal of Economic Surveys, Wiley Blackwell, vol. 8(1), pages 35-56, March.
- Gary Burtless, 1995. "International Trade and the Rise in Earnings Inequality," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 800-816, June.
- Sattinger, Michael, 1995. "Search and the Efficient Assignment of Workers to Jobs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 283-302, May.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpma:9706002. 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: (EconWPA)
If references are entirely missing, you can add them using this form.