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Can Market Power influence Employment, Wage Inequality and Growth ?

Alberto Bucci (), Fabio Fiorillo () and Stefano Staffolani ()

No 2000030, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We introduce an efficiency-wage mechanism into an innovation-driven growth model. Due to informational problems, the labour market is segmented and homogeneous workers may be employed either in a non-competitive intermediate sector or in a competitive research one. We analyse the impact that variations in the monopoly power of the intermediate firms may have on unemployment, wage inequality and growth. We find that the lower the product market competition in the intermediate sector, the higher the research employment, the lower the intermediate sector employment, the higher the aggregate growth rate. Growth and inequality are negatively correlated whereas growth and unemployment are positively correlated. The last two results are obtained through numerical simulations.

Keywords: Efficiency wages; research and development; endogenous growth; market power (search for similar items in EconPapers)
JEL-codes: D43 D92 J41 O3 (search for similar items in EconPapers)
Pages: 26
Date: 2001-01-01
New Economics Papers: this item is included in nep-dev, nep-lab and nep-mic
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Journal Article: Can Market Power Influence Employment, Wage Inequality and Growth? (2003) Downloads
Working Paper: Can Market Power influence Employment, Wage Inequality and Growth? (2000) Downloads
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