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Growth and unemployment in a shirking efficiency wage model

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  • Michelle Alexopoulos

Abstract

. The relationship between growth and unemployment in a general equilibrium shirking efficiency wage model is explored. In contrast to past work on this subject, detected shirkers are not dismissed but instead incur a monetary punishment. As a result of this modification, the model can account for a stable rate of unemployment when there is positive population growth and/or technological growth in the economy. Moreover, I show that institutions and policies that limit the ability of firms to punish detected shirkers or restrict their use of discretionary bonuses can increase unemployment and reduce the economy's long run growth rate. JEL Classification: E0, J41 Croissance et chômage dans un modèle de salaires efficients où certains se dérobent à leurs obligations. Ce mémoire explore la relation entre croissance et chômage dans un modèle d’équilibre général de salaires efficients où certains se dérobent à leurs obligations. Contrairement à ce qui postulé dans certains travaux antérieurs sur le sujet, les tricheurs détectés ne sont pas renvoyés mais subissent une pénalité monétaire. Grâce à cette modification, le présent modèle est capable d’expliquer un taux de chômage naturel stable même quand il y a croissance de la population et/ou progrès de la technologie dans l’économie. De plus, les résultats suggèrent que les institutions et politiques qui limitent la possibilité pour les entreprises de punir les tricheurs, ou réduisent la possibilité d’offrir des bonis discrétionnaires, peuvent accroître le niveau de chômage d’équilibre et réduire le taux de croissance à long terme de l’économie.

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  • 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.
    • Handle: RePEc:wly:canjec:v:36:y:2003:i:3:p:728-746
    DOI: 10.1111/1540-5982.t01-2-00010
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    References listed on IDEAS

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    Cited by:

    1. Vasilev, Aleksandar, 2016. "A Real-Business-Cycle model with efficiency wages and fiscal policy: the case of Bulgaria," EconStor Preprints 148413, ZBW - Leibniz Information Centre for Economics.
    2. Raurich, Xavier & Sorolla, Valeri, 2014. "Growth, unemployment and wage inertia," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 42-59.
    3. William Scarth, 2005. "Fiscal Policy Can Raise Both Employment and Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 11, pages 39-46, Fall.
    4. Aleksandar Vasilev, 2017. "A Real-Business-Cycle Model with Efficiency Wages and a Government Sector: The Case of Bulgaria," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 9(4), pages 359-377, December.
    5. Manash Ranjan Gupta & Priya Brata Dutta, 2024. "Crime, efficiency of labour and trade: a theoretical analysis," Indian Economic Review, Springer, vol. 59(1), pages 105-136, June.
    6. Aleksandar Vasilev, 2022. "Optimal fiscal policy in a model with efficiency wages: the case of Bulgaria," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 50(2), pages 195-209, September.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. Manuel David Cruz, 2022. "Labor productivity, real wages, and employment: evidence from a panel of OECD economies over 1960-2019," Working Papers PKWP2203, Post Keynesian Economics Society (PKES).

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    More about this item

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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