The Long Run Effect of Growth on Employment in a Labor Market with Matching Frictions: The Role of Labor Market Institutions

Valeri Sorolla ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: In this paper we analyze the long run effect of exogenous technological growth on the employment rate in a labor market with matching frictions when there is either individual or collective wage setting and different timing for setting wages, labor and capital. We obtain that the effect depends on the timing of setting wages with respect to capital and labor and on the way the unemployment benefit is financed. The type of wage negotiation (individual or collective) does not change really much the effect. The result that appears in most cases is that growth has a negative effect on the long run rate of employment meaning that, in general, growth is bad for employment.

Keywords: :Matching Frictions Unemployment; Growth; Wage Setting Systems. (search for similar items in EconPapers)
JEL-codes: E24 O41 (search for similar items in EconPapers)
Pages: 44
Date: 2014-12-22, Revised 2015-02-02
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:949.14

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