Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85935
Authors: 
de Groot, Henri L.F.
van Schaik, Anton B.T.M.
Year of Publication: 
2002
Series/Report no.: 
Tinbergen Institute Discussion Paper 02-017/3
Abstract: 
We develop a two-sector endogenous growth model with a dual labour market resulting from the presence of an effort extraction function in one sector. Effort of workers can be influenced by pay and monitoring. This results in an endogenous non-competitive wage differential between sectors and a monitoring intensity that is a source of fixed costs for the firm. Growth is driven by investments in R&D performed in the high-wage sector. Unemployment is determined by the costs and benefits of waiting for a high-paid job. The wage structure, growth, and unemployment are shown to depend on the way effort is extracted.
Subjects: 
endogenous growth
unemployment
effort extraction
dual labour market
JEL: 
E24
J21
J53
O41
Document Type: 
Working Paper

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