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Growth, unemployment and wage inertia
Raurich, Xavier; Sorolla, Valeri
Universitat de Barcelona
We introduce wage setting via efficiency wages in the neoclassical one-sector growth model to study the growth effects of wage inertia. We compare the dynamic equilibrium of an economy with wage inertia with the equilibrium of an economy without it. We show that wage inertia affects the long run employment rate and that the transitional dynamics of the main economic variables will be different because wages are a state variable when wage inertia is introduced. In particular, we show that the model with wage inertia can explain some growth patterns that cannot be explained when wages are flexible. We also study the growth effects of permanent technological and fiscal policy shocks in these two economies.
Mercat de treball
Atur
Dret al treball
Política de plena ocupació
Creixement econòmic
Labor market
Unemployment Right lo labor
Full employment policies
Economic growth
cc-by-nc-nd, (c) Raurich et al., 2014
http://creativecommons.org/licenses/by-nc-nd/3.0/
Working Paper
Universitat de Barcelona. Facultat d'Economia i Empresa
         

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