Unemployment and Productivity Growth: An Empirical Analysis within the Augmented Solow Model

Michael Bräuninger () and Markus Pannenberg

No 230, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: Does a country's level of unemployment have an impact on the long-run growth rate? Incorporating unemployment into a generalised Solow-type growth model, yields some answers. In the traditional Solow model, unemployment has no long-run influence on the growth rate and the level of productivity. The long-run level of productivity is reduced if higher unemployment leads to less formal education or to less learning-by-doing. If we allow for endogenous growth, unemployment reduces long-run productivity growth. Using panel data from 13 OECD countries from 1960 to 1990, we find evidence that an increase in unemployment scales down the long-run level of productivity.

Keywords: Growth; Equilibrium Unemployment; Panel Data (search for similar items in EconPapers)
JEL-codes: E24 O40 O57 (search for similar items in EconPapers)
Pages: 22 p.
Date: 2000
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Related works:
Journal Article: Unemployment and productivity growth: an empirical analysis within an augmented Solow model (2002)
Working Paper: Unemployment and Productivity Growth: An Empirical Analysis within the Augmented Solow Model (2000)
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