IDEAS home Printed from https://ideas.repec.org/a/bla/metroe/v61y2010i2p398-426.html
   My bibliography  Save this article

A Schumpeterian Growth Model With Equilibrium Unemployment

Author

Listed:
  • Carmelo Pierpaolo Parello

Abstract

We introduce efficiency‐wage unemployment in a model of growth with endogenous technical change. Our research aim is twofold. First, we try to provide an analytically tractable model of growth with efficiency‐wage unemployment that can be viewed as alternative to the standard models of growth and search unemployment. Second, we try to analyze the steady‐state effects of some labor market policies on unemployment and growth. We find that a positive relationship between growth and unemployment exists and that the effectiveness of any labor market policy aimed at improving the performance of the labor market crucially depends on how individuals discount future income.

Suggested Citation

  • Carmelo Pierpaolo Parello, 2010. "A Schumpeterian Growth Model With Equilibrium Unemployment," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 398-426, May.
    • Handle: RePEc:bla:metroe:v:61:y:2010:i:2:p:398-426
    DOI: 10.1111/j.1467-999X.2009.04076.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-999X.2009.04076.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-999X.2009.04076.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Acemoglu, Daron, 1997. "Technology, unemployment and efficiency," European Economic Review, Elsevier, vol. 41(3-5), pages 525-533, April.
    2. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 557-586.
    3. Cahuc, Pierre & Michel, Philippe, 1996. "Minimum wage unemployment and growth," European Economic Review, Elsevier, vol. 40(7), pages 1463-1482, August.
    4. Fabio Aricó, 2003. "Growth and Unemployment: Towards a Theoretical Integration," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 419-455, July.
    5. Philippe Aghion & Peter Howitt, 1994. "Growth and Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 477-494.
    6. Peretto, Pietro F., 1998. "Market Power, Growth and Unemployment," Working Papers 98-16, Duke University, Department of Economics.
    7. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    8. V. Anton Muscatelli & Patrizio Tirelli, 2001. "Unemployment and growth: some empirical evidence from structural time series models," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 1083-1088.
    9. Robert C. Feenstra, 1989. "Trade Policies for International Competitiveness," NBER Books, National Bureau of Economic Research, Inc, number feen89-1.
    10. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    11. repec:adr:anecst:y:1998:i:49-50:p:04 is not listed on IDEAS
    12. Sennewald, Ken, 2007. "Controlled stochastic differential equations under Poisson uncertainty and with unbounded utility," Journal of Economic Dynamics and Control, Elsevier, vol. 31(4), pages 1106-1131, April.
    13. Dale T. Mortensen, 2005. "Alfred Marshall Lecture: Growth, Unemployment, and Labor Market Policy," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 236-258, 04/05.
    14. Smulders, Sjak & van de Klundert, Theo, 1995. "Imperfect competition, concentration and growth with firm-specific R & D," European Economic Review, Elsevier, vol. 39(1), pages 139-160, January.
    15. Charles I. Jones, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 495-525.
    16. Paul Segerstrom & Elias Dinopoulos, 1999. "A Schumpeterian Model of Protection and Relative Wages," American Economic Review, American Economic Association, vol. 89(3), pages 450-472, June.
    17. Anton B. T. M. Van Schaik & Henri L. F. De Groot, 1998. "Unemployment and Endogenous Growth," LABOUR, CEIS, vol. 12(2), pages 189-219, July.
    18. Meckl, Jurgen, 2004. "Accumulation of technological knowledge, wage differentials, and unemployment," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 65-82, March.
    19. Bean, Charles & Pissarides, Christopher, 1993. "Unemployment, consumption and growth," European Economic Review, Elsevier, vol. 37(4), pages 837-854, May.
    20. Lawrence F. Katz & Lawrence H. Summers, 1989. "Can Interindustry Wage Differentials Justify Strategic Trade Policy?," NBER Chapters, in: Trade Policies for International Competitiveness, pages 85-124, National Bureau of Economic Research, Inc.
    21. Feenstra, Robert C. (ed.), 1989. "Trade Policies for International Competitiveness," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226239491, August.
    22. Mendez, Rodrigue, 2002. "Creative Destruction and the Rise of Inequality," Journal of Economic Growth, Springer, vol. 7(3), pages 259-281, September.
    23. Nakajima, Tomoyuki, 2006. "Unemployment and indeterminacy," Journal of Economic Theory, Elsevier, vol. 126(1), pages 314-327, January.
    24. Hoon, Hian Teck & Phelps, Edmund S., 1997. "Growth, wealth and the natural rate: Is Europe's jobs crisis a growth crisis?," European Economic Review, Elsevier, vol. 41(3-5), pages 549-557, April.
    25. Elias Dinopoulos & Constantinos Syropoulos, 2007. "Rent Protection as a Barrier to Innovation and Growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(2), pages 309-332, August.
    26. Frédérique Cerisier & Fabien Postel-Vinay, 1998. "Endogenous Growth and the Labor Market," Annals of Economics and Statistics, GENES, issue 49-50, pages 105-126.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi & Liao, Chih-Hsing, 2019. "Effects of Minimum Wage on Automation and Innovation in a Schumpeterian Economy," MPRA Paper 95824, University Library of Munich, Germany.
    2. Chu, Angus C. & Furukawa, Yuichi & Kou, Zonglai & Liu, Xueyue, 2019. "Effects of Minimum Wage on Import and Innovation: Theory and Evidence from China," MPRA Paper 97008, University Library of Munich, Germany.
    3. Nguyen Hoang Quy, 2016. "Relationship between Economic Growth, Unemployment and Poverty: Analysis at Provincial Level in Vietnam," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(12), pages 113-119, December.
    4. Angus C. Chu & Guido Cozzi & Haichao Fan & Yuichi Furukawa, 2021. "Inflation, Unemployment, and Economic Growth in a Schumpeterian Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 874-909, July.
    5. Chu, Angus C. & Kou, Zonglai & Wang, Xilin, 2020. "Dynamic effects of minimum wage on growth and innovation in a Schumpeterian economy," Economics Letters, Elsevier, vol. 188(C).
    6. Angus C. Chu & Haichao Fan & Yuichi Furukawa & Zonglai Kou & Xueyue Liu, 2021. "Minimum Wages, Import Status, And Firms' Innovation: Theory And Evidence From China," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 441-458, January.
    7. Parello, Carmelo Pierpaolo, 2011. "Labor market rigidity and productivity growth in a model of innovation-driven growth," Economic Modelling, Elsevier, vol. 28(3), pages 1058-1067, May.
    8. Karikari-Apau, Ellen & Abeti, Wilson, 2019. "The Impact of Unemployment on Economic Growth in China," MPRA Paper 96100, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meckl, Jurgen, 2004. "Accumulation of technological knowledge, wage differentials, and unemployment," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 65-82, March.
    2. Parello, Carmelo Pierpaolo, 2011. "Labor market rigidity and productivity growth in a model of innovation-driven growth," Economic Modelling, Elsevier, vol. 28(3), pages 1058-1067, May.
    3. Meckl, Jürgen, 1999. "Efficiency-wage unemployment and endogenous growth," Discussion Papers, Series I 295, University of Konstanz, Department of Economics.
    4. Tetsugen Haruyama & Campbell Leith, 2010. "Unemployment And The Productivity Slowdown: An Effciency Wage Perspective," The Japanese Economic Review, Japanese Economic Association, vol. 61(3), pages 301-319, September.
    5. Alberto Bucci & Fabio Fiorillo & Stefano Staffolani, 2003. "Can Market Power Influence Employment, Wage Inequality and Growth?," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 129-160, May.
    6. Pingle, Mark & Guerrero, Federico & Mahmoudi, Mina & Wuthisatian, Rattaphon, 2023. "A Descriptive Growth Model with Unemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 482-500.
    7. Fabio Aricó, 2003. "Growth and Unemployment: Towards a Theoretical Integration," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 419-455, July.
    8. Gaetano Lisi & Maurizio Pugno, 2015. "A matching model of endogenous growth and underground firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 11(4), pages 347-369, December.
    9. Campbell leith & Chol-Won Li, 2001. "Unemployment and the Productivity Slowdown: A Labour Supply Perspective," Working Papers 2001_13, Business School - Economics, University of Glasgow.
    10. Carmeci, Gaetano & Mauro, Luciano, 2003. "Imperfect labor market and convergence: theory and evidence for some OECD countries," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 837-856, November.
    11. Pierre-Richard Agénor, 2005. "Unemployment-Poverty Tradeoffs," Central Banking, Analysis, and Economic Policies Book Series, in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.),Labor Markets and Institutions, edition 1, volume 8, chapter 5, pages 115-165, Central Bank of Chile.
    12. Gaetano Lisi & Maurizio Pugno, 2010. "The Underground Economy in a Matching Model of Endogenous Growth," Working Papers 2010-07, Universita' di Cassino, Dipartimento di Economia e Giurisprudenza.
    13. MG. Ladu, 2005. "Growth and Employment: A survey on the Demand Side of the Labour Market," Working Paper CRENoS 200507, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    14. Luca Gori & Luciano Fanti, 2009. "Right-to-manage unions endogenous growth and welfare," Economics Bulletin, AccessEcon, vol. 29(2), pages 903-917.
    15. Thomas Ziesemer, 2005. "Monopolistic Competition And Search Unemployment," Metroeconomica, Wiley Blackwell, vol. 56(3), pages 334-359, July.
    16. Ken‐ichi Hashimoto & Ryonghun Im, 2019. "Asset bubbles, labour market frictions and R&D‐based growth," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(2), pages 822-846, May.
    17. Ledezma, Ivan, 2013. "Defensive strategies in quality ladders," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 176-194.
    18. Michaelis, Jochen & Birk, Angela, 2006. "Employment- and growth effects of tax reforms," Economic Modelling, Elsevier, vol. 23(6), pages 909-925, December.
    19. Vesna Stavrevska, 2011. "The efficiency wages perspective to wage rigidity in the open economy: a survey," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(3), pages 273-299, June.
    20. Albert, Max & Meckl, Jürgen, 1997. "Efficiency wages, unemployment and welfare: A trade theorists' guide," Discussion Papers, Series II 348, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:metroe:v:61:y:2010:i:2:p:398-426. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0026-1386 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.