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Title:Unemployment invariance PDF Logo
Authors:Karanassou, Marika
Snower, Dennis J.
Issue Date:2002
Series/Report no.:IZA Discussion paper series 530
Abstract:This paper provides a critique of the ?unemployment invariance hypothesis,? according to which the behavior of the labor market ensures that the long-run unemployment rate is independent of the size of the capital stock, productivity, and the labor force. Using Solow growth and endogenous growth models, we show that the labor market need not contain all the equilibrating mechanisms to ensure unemployment invariance and that other markets may perform part of the equilibrating process as well. By implication, policies that stimulate investment and R&D and policies that affect the size of the labor force may influence the long-run unemployment rate. Layard-Nickell-Jackman ?invariance condition? for labor market systems. This condition is meant to ensure that unemployment is not trended in response to growth in the capital stock, the labor force, or productivity.
Subjects:unemployment
employment
wage determination
labor supply
capital accumulation
productivity
technological change
economic growth
JEL:J21
J68
J64
J38
J30
J23
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
Publikationen von Forscherinnen und Forschern des IfW

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