Industrialization Jobs Creation and Wages Incentives

Joao Faria and Mohamed Jellal ()

MPRA Paper from University Library of Munich, Germany

Abstract: An optimizing representative firm pays efficiency wages to skilled workers to produce technological innovations, which are assumed to be of labor saving type, affecting negatively the hiring rate of unskilled workers. The results are: i) The efficiency wage of skilled workers is determined by the Solow condition; ii) There is underemployment of unskilled workers whenever the added value of innovations is greater than the opportunity cost of skilled workers’ wages; iii) The optimal level of technology is independent of technological parameters; iv) The employment of skilled workers increases with the level of technology and decreases with the efficiency wage; v) The employment of unskilled workers is not necessarily negatively affected by technological innovations in the steady state.

Keywords: Unemployment; Dynamic Efficiency Wage Model; Technological Change (search for similar items in EconPapers)
JEL-codes: D92 J41 O33 (search for similar items in EconPapers)
Date: 2009-09-01
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17185

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