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http://hdl.handle.net/10419/21394
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| Title: | | Workplaces in the Primary Economy and Wage Pressure in the Secondary Labor Market  |
| Authors: | | Falkinger, Josef Grossmann, Volker |
| Issue Date: | | 2002 |
| Series/Report no.: | | IZA Discussion paper series 523 |
| Abstract: | | This paper develops a two-sector general equilibrium model in which firms in the primary economy have to create workplaces prior to production and product market competition. For this, we introduce the endogenous sunk cost approach with two-stage decisions of firms from IO in the macro-labor literature. By hypothesizing that technological change has lowered marginal costs but has raised organizational requirements for installing workplaces, we are capable to explain downsizing of low-skilled jobs in the primary economy despite wage flexibility ex ante. This leads to more accentuated labor market segmentation, i.e. an increase in wage pressure in the secondary economy. |
| Subjects: | | dual labor market endogenous sunk costs organizational labor segregation workplace |
| JEL: | | C23 J26 C25 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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