Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/3111
Authors: 
Karanassou, Marika
Snower, Dennis J.
Year of Publication: 
2002
Series/Report no.: 
Working paper series, Department of Economics, Queen Mary College, London 476
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 alone need not contain all the equilibrating mechanisms to ensure unemployment invariance; in particular, other markets may perform part of the equilibrium 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: 
J38
J30
J23
J21
J68
J64
Document Type: 
Working Paper

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