IDEAS home Printed from https://ideas.repec.org/a/ier/iecrev/v43y2002i3p875-894.html
   My bibliography  Save this article

Unemployment and Growth in the Long Run: An Efficiency-Wage Model with Optimal Savings

Author

Listed:
  • Richard A. Breche

    (Carleton University, Canada)

  • Zhiqi Chen

    (Carleton University, Canada)

  • Ehsan U. Choudhri

    (Carleton University, Canada)

Abstract

An efficiency-wage model of steady-state equilibrium with labor-augmenting technical progress is developed to explore the long-run relationship between unemployment and growth. The rate of productivity growth is either specified exogenously or determined endogenously. In both cases, we preserve key results of the Shapiro--Stiglitz efficiency-wage analysis without growth. Our model, however, also yields some striking new results. For instance, an exogenous increase in the growth rate may raise the rate of efficiency-wage unemployment, and a once-for-all rise in the labor force may reduce the unemployment rate in the endogenous-growth case. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association

Suggested Citation

  • Richard A. Breche & Zhiqi Chen & Ehsan U. Choudhri, 2002. "Unemployment and Growth in the Long Run: An Efficiency-Wage Model with Optimal Savings," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 875-894, August.
    • Handle: RePEc:ier:iecrev:v:43:y:2002:i:3:p:875-894
    as

    Download full text from publisher

    File URL: http://openurl.ingenta.com/content?genre=article&issn=0020-6598&volume=43&spage=875
    Download Restriction: Free access to full text is restricted to Ingenta subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

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


    Cited by:

    1. Moreno-Galbis, E., 2006. "Unemployment and endogenous growth with new technologies-skill complementarity," Economic Modelling, Elsevier, vol. 23(2), pages 364-386, March.
    2. Michelle Alexopoulos, 2003. "Growth and unemployment in a shirking efficiency wage model," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(3), pages 728-746, August.
    3. Richard A. Brecher & Till Gross, 2020. "Unemployment and income‐distribution effects of economic growth: A minimum‐wage analysis with optimal saving," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(3), pages 243-259, September.
    4. Martin Zagler, 2009. "Economic growth, structural change, and search unemployment," Journal of Economics, Springer, vol. 96(1), pages 63-78, January.
    5. Raurich, Xavier & Sorolla, Valeri, 2014. "Growth, unemployment and wage inertia," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 42-59.
    6. Howard Petith, 2005. "Capitalism, Unemployment and the Transition to the Contemporary Pattern of Growth," UFAE and IAE Working Papers 649.05, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    7. Richard A. Brecher & Zhiqi Chen, 2010. "Unemployment of Skilled and Unskilled Labor in an Open Economy: International Trade, Migration, and Outsourcing," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 990-1000, November.
    8. Haoming Liu & Jinli Zeng, 2008. "Determinants of Long‐Run Unemployment," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 775-793, January.
    9. Eva, MORENO-GALBIS, 2004. "Unemployment and Endogenous Growth with Capital-Skill Complementarity," LIDAM Discussion Papers IRES 2004001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Alan V. Deardorff, 2016. "Local Import Competition in a Lumpy Country," Working Papers 653, Research Seminar in International Economics, University of Michigan.
    11. 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.
    12. Richard A. Brecher & Zhiqi Chen & Ehsan Choudhri, 2007. "Optimal Taxation in a Dynamic Model of Shirking and Unemployment: Shapiro and Stiglitz Meet Chamley," Carleton Economic Papers 07-07, Carleton University, Department of Economics, revised Aug 2010.
    13. Howard Petith, 2005. "Capitalism, Unemployment and the Transition to the Contemporary Pattern of Growth," Working Papers 194, Barcelona School of Economics.
    14. Brecher, Richard A. & Chen, Zhiqi & Choudhri, Ehsan U., 2010. "A dynamic model of shirking and unemployment: Private saving, public debt, and optimal taxation," Journal of Economic Dynamics and Control, Elsevier, vol. 34(8), pages 1392-1402, August.
    15. Francisco Lasso-Valderrama & Laura Rodríguez-Quintero, 2018. "Ciclo y composición del cambio en los salarios: una aproximación a la estructura salarial de Colombia," Borradores de Economia 1057, Banco de la Republica de Colombia.
    16. Manash Ranjan Gupta & Priya Brata Dutta, 2022. "Taxation, capital accumulation, environment and unemployment in an efficiency wage model," Journal of Economics, Springer, vol. 135(2), pages 151-198, March.

    More about this item

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    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:ier:iecrev:v:43:y:2002:i:3:p:875-894. 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.

    We have no bibliographic references for this item. You can help adding them by using 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-Blackwell Digital Licensing or the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/deupaus.html .

    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.