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Title:Unemployment invariance
Authors:Karanassou, Marika
Snower, Dennis J.
Issue Date:2004
Citation:[Journal:] German economic review [ISSN:] 1465-6485 [Volume:] 5 [Year:] 2004 [Issue:] 3 [Pages:] 297-317
Abstract:This paper provides a critique of the ‘unemployment invariance hypothesis’, according to which the behavior of the labor market, by itself, ensures that the long-run unemployment rate is independent of the size of the capital stock, productivity and the labor force. In the context of an endogenous growth model, we show that the labor market alone need not contain all the equilibrating mechanisms to ensure unemployment invariance; in particular, other markets may perform part of the equilibrating process as well. By implication, policies that raise the growth path of capital or increase the effective working-age population may influence the long-run unemployment rate.
Subjects:Unemployment
employment
wage determination
labor supply
capital accumulation
productivity
technological change
economic growth
JEL:J21
J23
J30
J38
J64
J68
Persistent Identifier of the first edition:doi:10.1111/j.1465-6485.2004.00110.x
Document Type:Article
Appears in Collections:Economists Online

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