Unemployment and the Productivity Slowdown: A Labour Supply Perspective

Campbell Leith and Chol-Won Li
Authors registered in the RePEc Author Service: 春山 鉄源

Working Papers from Business School - Economics, University of Glasgow

Abstract: Many OECD economies suffered a productivity slowdown beginning in the early 1970s. However, the increase in unemployment that followed this slowdown was more pronounced in European economies relative to the US. In this paper we present an efficiency wage model, which enables us to identify five channels through which the productivity slowdown can affect workers’ effort incentives. We argue that this model can explain the different trends in unemployment across countries over this period in the face of a similar slowdown in productivity. We also demonstrate how the link between growth and unemployment depends upon labour market institutions in such a way that we can reconcile the mixed empirical results observed in the literature.

Keywords: technical progress; endogenous growth; unemployment; efficiency wages (search for similar items in EconPapers)
Date: 2001-08
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2001_13

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