Optimal growth with labor market frictions
Marco Guerrazzi
International Journal of Economic Theory, 2023, vol. 19, issue 4, 961-987
Abstract:
In this paper, I build a capital accumulation model in which labor has to be alternatively employed in the production of goods or in the recruitment of workers. Within this setting, I show that (i) the intensive measure of capital may converge towards its stationary value in a non‐monotonic manner, (ii) Pareto‐optimal allocations can also be achieved in a decentralized environment in which the wage is indexed to labor market tightness, and (iii) the consistency of the wage that implements efficient allocations with the competitiveness of the market for goods relies on vanishing values of the discount rate.
Date: 2023
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https://doi.org/10.1111/ijet.12386
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Working Paper: Optimal growth with labour market frictions (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:19:y:2023:i:4:p:961-987
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