Productivity and Unemployment in a Two-country Model with Endogenous Growth
Ton Schaik () and
Henri de Groot ()
No 1997-53, Discussion Paper from Tilburg University, Center for Economic Research
Relative to the United States, most European countries have high rates of unemployment and low levels of productivity in manufacturing. To relate these issues, we develop a leader-follower model with endogenous growth and dual labour markets, stressing the role of high-tech and high-wage sectors in trade between countries. The model shows a negative relation between unemployment and growth. The steady state relative productivity level and the corresponding rates of unemployment depend on the relative level of fixed costs in the high-tech sectors of both countries. Downsizing of firms in the leader country raises the worldwide rate of unemployment, whereas downsizing of firms in the follower country enlarges the productivity trap.
Keywords: international trade; endogenous growth; unemployment; efficiency wages; managerial fixed costs; relative productivity (search for similar items in EconPapers)
JEL-codes: O41 F43 J64 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:tiu:tiucen:199301af-ebec-49ab-ad79-6e6ce342c2c6
Access Statistics for this paper
More papers in Discussion Paper from Tilburg University, Center for Economic Research
Bibliographic data for series maintained by Richard Broekman ().