IDEAS home Printed from https://ideas.repec.org/p/cte/werepe/2970.html
   My bibliography  Save this paper

Irreversibility, uncertainty and underemployment equilibria

Author

Listed:
  • Croix, David de la
  • Licandro, Omar

Abstract

In a competitive overlapping generation model, underutilization of labor and equipment can be due to the combination of irreversibility of human capital, physical capital and technology with idiosyncratic productivity shocks. Irreversibilities and uncertainty generate an inefficient allocation of resources among sectors, which takes the form of underemployment and underutilization of capacities at the aggregate level and affects the equilibrium path of capital. We provide examples in which this missallocation, called structural "mismatch," can be responsible, a.o., for an "inescapable poverty trap," or for periodic orbits generating endogenous fluctuations in underemployment.

Suggested Citation

  • Croix, David de la & Licandro, Omar, 1994. "Irreversibility, uncertainty and underemployment equilibria," UC3M Working papers. Economics 2970, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:2970
    as

    Download full text from publisher

    File URL: https://e-archivo.uc3m.es/rest/api/core/bitstreams/6baadada-8b8b-4539-b818-df256c1899f8/content
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Diamond, Peter & Fudenberg, Drew, 1989. "Rational Expectations Business Cycles in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 606-619, June.
    2. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(3), pages 441-463.
    3. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
    4. Bent Hansen, 1970. "Excess Demand, Unemployment, Vacancies, and Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(1), pages 1-23.
    5. Kooiman, P, 1984. "Smoothing the Aggregate Fix-Price Model and the Use of Business Survey Data," Economic Journal, Royal Economic Society, vol. 94(376), pages 899-913, December.
    6. Sneessens, Henri R., 1987. "Investment and the inflation-unemployment tradeoff in a macroeconomic rationing model with monopolistic competition," European Economic Review, Elsevier, vol. 31(3), pages 781-808, April.
    7. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
    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. Fagnart, Jean-Francois & Licandro, Omar & Sneessens, Henri R., 1997. "Capacity utilization and market power," Journal of Economic Dynamics and Control, Elsevier, vol. 22(1), pages 123-140, November.
    2. Boretta, M & Cantù, L & Corti, M & del Favero, E, 1997. "Cubic phases of gangliosides in water: Possible role of the conformational bistability of the headgroup," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 236(1), pages 162-176.
    3. Fagnart, Jean-Francois & Licandro, Omar & Sneessens, Henri, 1995. "Capacity utilization dynamics and market power," UC3M Working papers. Economics 3906, Universidad Carlos III de Madrid. Departamento de Economía.
    4. Anna Pestova, 2015. "Leading Indicators of the Business Cycle: Dynamic Logit Models for OECD Countries and Russia," HSE Working papers WP BRP 94/EC/2015, National Research University Higher School of Economics.

    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. Sniekers, F.J.T., 2013. "Endogenous Beveridge cycles and the volatility of unemployment," CeNDEF Working Papers 13-12, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    2. Smolny, Werner, 1995. "Employment and unemployment in Germany: Some results from a macroeconomic disequilibrium model," Discussion Papers, Series II 247, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    3. Robert Shimer, 2007. "Mismatch," American Economic Review, American Economic Association, vol. 97(4), pages 1074-1101, September.
    4. Florian Sniekers, 2018. "Persistence And Volatility Of Beveridge Cycles," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(2), pages 665-698, May.
    5. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    6. Bill Dupor, 2005. "Keynesian Conundrum: Multiplicity and Time Consistent Stabilization," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(1), pages 154-177, January.
    7. Berliant, Marcus & Reed III, Robert R. & Wang, Ping, 2006. "Knowledge exchange, matching, and agglomeration," Journal of Urban Economics, Elsevier, vol. 60(1), pages 69-95, July.
    8. Peter Diamond, 2011. "Unemployment, Vacancies, Wages," American Economic Review, American Economic Association, vol. 101(4), pages 1045-1072, June.
    9. Patrick Artus, 1993. "Défauts de coordination des activités. Principes et exemples," Revue Économique, Programme National Persée, vol. 44(3), pages 551-568.
    10. Carsten Ochsen, 2009. "On the measurement of mismatch," Applied Economics Letters, Taylor & Francis Journals, vol. 16(4), pages 405-409.
    11. Steven J. Davis & R. Jason Faberman & John C. Haltiwanger, 2013. "The Establishment-Level Behavior of Vacancies and Hiring," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 581-622.
    12. Bruce Fallick & Charles A. Fleischman, 2001. "The importance of employer-to-employer flows in the U.S. labor market," Finance and Economics Discussion Series 2001-18, Board of Governors of the Federal Reserve System (U.S.).
    13. Mahmood A. Zaidi, 1986. "Do Incomes Policies Restrain Wage Inflation? Some Evidence From Australia, Canada, and the United States," The Economic Record, The Economic Society of Australia, vol. 62(4), pages 468-484, December.
    14. Jerome Fahrer & Andrew Pease, 1993. "The Unemployment/Vacancy Relationship in Australia," RBA Research Discussion Papers rdp9305, Reserve Bank of Australia.
    15. Ciccone, Antonio & Matsuyama, Kiminori, 1996. "Start-up costs and pecuniary externalities as barriers to economic development," Journal of Development Economics, Elsevier, vol. 49(1), pages 33-59, April.
    16. Yashiv, Eran, 2006. "The Beveridge Curve," IZA Discussion Papers 2479, Institute of Labor Economics (IZA).
    17. Diebold, Francis X & Rudebusch, Glenn D, 1996. "Measuring Business Cycles: A Modern Perspective," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 67-77, February.
    18. Velasco, Andres, 1996. "Animal spirits, investment and international capital movements," Journal of International Money and Finance, Elsevier, vol. 15(2), pages 221-237, April.
    19. Paul Beaudry & Dana Galizia & Franck Portier, 2015. "Reviving the Limit Cycle View of Macroeconomic Fluctuations," NBER Working Papers 21241, National Bureau of Economic Research, Inc.
    20. Pranab Bardhan, 1993. "Economics of Development and the Development of Economics," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 129-142, Spring.

    More about this item

    Keywords

    Underemployment;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

    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:cte:werepe:2970. 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: Ana Poveda (email available below). General contact details of provider: http://www.eco.uc3m.es/ .

    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.