Sustainable Capitalism: Full-Employment Flexicurity Growth with Real Wage Rigidities

Toichiro Asada, Peter Flaschel, Alfred Greiner and Christian Proaño
Additional contact information
Toichiro Asada: Faculty of Economics, Chuo University, Tokyo, Japan

No 5-2010, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: In this paper we present a model of flexicurity capitalism that exhibits a second labor market with the government as an employer of first resort, where all workers not employed by firms in the private sector find meaningful employment. We show that the model exhibits a unique interior steady state which is asymptotically stable under real wage adjustment dynamics of the type considered in Blanchard and Katz (1999), and under a type of Okun's Law that links the level of utilization of firms to their hiring and firing decision. The introduction of a company pension fund can be shown to contribute to the viability of the analyzed economic system. However, when credit is incorporated in the model, in place of savings-driven supply side fluctuations in economic activity, investment-driven demand side business cycle fluctuations (of a probably much more volatile type) can take place.

Keywords: Flexicurity; employer of ¯rst resort; Solovian growth; company pension funds; sustainability (search for similar items in EconPapers)
JEL-codes: E3 E6 H1 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.boeckler.de/pdf/p_imk_wp_5_2010.pdf (application/pdf)

Related works:
Journal Article: Sustainable capitalism: Full-employment flexicurity growth with real wage rigidities (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imk:wpaper:5-2010

Access Statistics for this paper

More papers in IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute Contact information at EDIRC.
Bibliographic data for series maintained by Sabine Nemitz ().