Wages and Productivity Growth in a Competitive Industry

Helmut Bester and Emmanuel Petrakis

No 2031, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Our model studies the evolution of productivity growth in a competitive industry. The exogenous wage rate determines the firms' engagement in labour productivity enhancing process innovation. There is a unique steady state of the industry dynamics, which is globally stable. In the steady state, the number of active firms, their unit labour cost and supply depend on the growth rate but not on the level of the wage rate. In addition to providing comparative statics of the steady state, the paper characterizes the industry's adjustment path.

Keywords: industry dynamics; Process Innovation; Wages (search for similar items in EconPapers)
JEL-codes: D24 D41 D92 J30 (search for similar items in EconPapers)
Date: 1998-12
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Related works:
Journal Article: Wages and productivity growth in a competitive industry (2003)
Working Paper: Wages and Productivity Growth in a Competitive Industry (1998)
Working Paper: Wages and Productivity Growth in a Competitive Industry
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