A Schumpeterian Growth Model With Equilibrium Unemployment

Abstract

We introduce efficiency-wage unemployment in a model of growth with endogenous technical change. Our research aim is twofold. First, we try to provide an analytically tractable model of growth with efficiency-wage unemployment that can be viewed as alternative to the standard models of growth and search unemployment. Second, we try to analyze the steady-state effects of some labor market policies on unemployment and growth. We find that a positive relationship between growth and unemployment exists and that the effectiveness of any labor market policy aimed at improving the performance of the labor market crucially depends on how individuals discount future income

Relationship between Economic Growth, Unemployment and Poverty: Analysis at Provincial Level in Vietnam

“…The first research of the relationship between economic growth and unemployment was conducted in the mid-20th century by Harrod and Domar. However, their contribution was an isolated example because the Solow model introduced new ideas into the debate on economic growth, at the same time relegating the studies of the growth-unemployment relationship as less relevant (Parello, 2010).…”

Growth, Unemployment and Its Implication on Poverty: Empirical Study in Districts/Cities of South Sumatera Province

“…The result is that Okun Law does not apply in some developing countries in Asia. Parello (2010) introduced efficiency-wages unemployment in endogenous growth models by providing tractable growth model analysis as an alternative to the standard model of growth and search-unemployment. The results show that there is a positive relationship between economic growth and the unemployment rate.…”

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