Efficiency-wage unemployment and endogenous growth
This paper examines positive and normative implications of efficiency-wage induced unemployment within a model of endogenous growth. Sectorspecific impacts of the wage rate on labor efficiency establish a correlation between the growth rate and the rate of unemployment. The sign of this correlation is shown to be given by the intersectoral wage differential. Despite the existence of unemployment, decisive positive properties of the full-employment model are preserved. However, welfare implications of the full-employment model may be reversed. The optimal policy can be to reduce growth, while at the same time raising unemployment.
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| Length: | |
| Date of creation: | 1999 |
| Handle: | RePEc:zbw:kondp1:295 |
| Contact details of provider: | Postal: D-78457 Konstanz Phone: +49 7531 88 2314 Fax: +49-7531-88-2145 Web page: http://www.wiwi.uni-konstanz.de/ More information through EDIRC
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- Benassy, Jean-Pascal, 1998.
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- Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
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- Philippe Aghion & Peter Howitt, 1994. "Growth and Unemployment," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 477-494.
- Aghion, Philippe & Howitt, Peter, 1991. "Growth and Unemployment," CEPR Discussion Papers 577, C.E.P.R. Discussion Papers.
- George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
- Bean, Charles & Pissarides, Christopher, 1993. "Unemployment, consumption and growth," European Economic Review, Elsevier, vol. 37(4), pages 837-854, May.
- C Bean & Christopher A. Pissarides, 1992. "Unemployment, Consumption and Growth," CEP Discussion Papers dp0100, Centre for Economic Performance, LSE.
- Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
- Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February. Full references (including those not matched with items on IDEAS)
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