Technical Change and Market Structure: Effects on Employment

Susanne Wied-Nebbeling

Journal of Evolutionary Economics, 1993, vol. 3, issue 1, 43-61

Abstract: This paper investigates the ceteris-paribus effects of labor reducing technical progress on industry-wide employment under different market regimes. We distinguish between a contestable market, a monopoly, and a market with bounded supplier power. Under a constant wage rate, employment will not decrease only if the elasticity of demand on a contestable market exceeds one. The same thing holds for markets with bounded supplier power. Under a monopoly, price elasticity must even be more than three. Ceteris paribus we thus have to expect a higher probability of employment reduction under a monopoly than under other market regimes. Raising wages proportional to productivity leads to an employment reduction on stagnating markets with supplier power. Here, a raise in wages without layoffs is only possible if the growth in demand is at least as high as the growth in productivity.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:spr:joevec:v:3:y:1993:i:1:p:43-61

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