Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/68908 
Authors: 
Year of Publication: 
1999
Series/Report no.: 
Diskussionsbeiträge - Serie I No. 295
Publisher: 
Universität Konstanz, Fakultät für Wirtschaftswissenschaften und Statistik, Konstanz
Abstract: 
This paper examines positive and normative implications of efficiency-wage induced unemployment within a model of endogenous growth. Sectorspecific impacts of the wage rate on labor efficiency establish a correlation between the growth rate and the rate of unemployment. The sign of this correlation is shown to be given by the intersectoral wage differential. Despite the existence of unemployment, decisive positive properties of the full-employment model are preserved. However, welfare implications of the full-employment model may be reversed. The optimal policy can be to reduce growth, while at the same time raising unemployment.
Subjects: 
innovation-based growth
unemployment
efficiency wages
JEL: 
E24
O40
Document Type: 
Working Paper

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