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Unemployment, Growth and the Organisation of Work

Henri de Groot () and Ton Schaik ()

No 02-017/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We develop a two-sector endogenous growth model with a dual labour market resulting from the presence of an effort extraction function in one sector. Effort of workers can be influenced by pay and monitoring. This results in an endogenous non-competitive wage differential between sectors and a monitoring intensity that is a source of fixed costs for the firm. Growth is driven by investments in R&D performed in the high-wage sector. Unemployment is determined by the costs and benefits of waiting for a high-paid job. The wage structure, growth, and unemployment are shown to depend on the way effort is extracted.

Keywords: endogenous growth; unemployment; effort extraction; dual labour market (search for similar items in EconPapers)
JEL-codes: E24 J21 J53 O41 (search for similar items in EconPapers)
Date: 2002-02-15
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