Externalities in Wage Formation and Structural Unemployment

David de la Croix

Annals of Economics and Statistics, 1993, issue 32, 17-41

Abstract: A sectorial general equilibrium model in which externalities among sectors arise through wage envy is presented. Without externalities, equilibrium unemployment is only a function of the product market power of the firm and of demand uncertainty. With externalities, unemployment is higher. It is increasing with union power even though bargaining is efficient. Aggregate demand shock do not modify the magnitude of unemployment. However, when externalities are present, sectorial demand shocks modify the allocation of output across sectors; this reallocation may increase or decrease unemployment depending on the initial situation of the economy.

Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.jstor.org/stable/20075924 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:1993:i:32:p:17-41

Access Statistics for this article

Annals of Economics and Statistics is currently edited by Laurent Linnemer

More articles in Annals of Economics and Statistics from GENES Contact information at EDIRC.
Bibliographic data for series maintained by Secretariat General () and Laurent Linnemer ().