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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/18737
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| Title: | | Equilibrium unemployment and capital intensity under product and labor market imperfections  |
| Authors: | | Kauppi, Heikki Koskela, Erkki Stenbacka, Rune |
| Issue Date: | | 2004 |
| Series/Report no.: | | CESifo working papers 1343 |
| Abstract: | | We study the implications of product and labor market imperfections for equilibrium unemployment under both exogenous and endogenous capital intensity. With endogenous capital intensity, stronger labor market imperfections always increase equilibrium unemployment. The relationship between the long-run unemployment and the intensity of product market competition is not necessarily monotonic, but there is an elasticity of substitution between capital and labor below one such that the long-run equilibrium unemployment is an increasing function of product market imperfections when the elasticity exceeds this threshold. Higher interest rates increase (decrease) the long-run equilibrium unemployment when the elasticity of substitution is below (above) one. |
| Subjects: | | equilibrium unemployment product market imperfections capital intensity wage bargaining |
| JEL: | | E22 L11 J51 E24 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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