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| Home > Research literature > Working papers > Growth, unemployment and wage inertia |
| Home > Research literature > Working papers > Growth, unemployment and wage inertia |
(Universitat de Barcelona) (Universitat Autònoma de Barcelona)| Date: | 2011 |
| Description: | 31 p. |
| Abstract: | 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 wage inertia. 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 non-monotonic transitions in the economy with wage inertia that do not arise in the economy with flexible wages. We also study the growth effects of permanent technological and fiscal policy shocks in these two economies. During the transition, the growth effects of technological shocks obtained when wages exhibit inertia may be the opposite from the ones obtained when wages are flexible. In the long run, these technological shocks may have long run effects if there is wage inertia. We also show that the growth effects of fiscal policies will be delayed when there is wage inertia. |
| Grants: | Ministerio de Ciencia e Innovación ECO2009-06953 Ministerio de Ciencia e Innovación ECO2009- 09847 Agència de Gestió d'Ajuts Universitaris i de Recerca 2009SGR-1051 Agència de Gestió d'Ajuts Universitaris i de Recerca 2009SGR-578 |
| Rights: | Aquest document està subjecte a una llicència d'ús de Creative Commons, amb la qual es permet copiar, distribuir i comunicar públicament l'obra sempre que se'n citin l'autor original, la universitat, la unitat i l'institut i no se'n faci cap ús comercial ni obra derivada, tal com queda estipulat en la llicència d'ús  |
| Language: | Anglès |
| Series: | Departament d'Economia i d'Història Econòmica. Unitat de Fonaments de l'Anàlisi Econòmica / Institut d'Anàlisi Econòmica (CSIC). Working papers |
| Series: | Working papers ; 879.11 |
| Document: | Working paper |
| Subject: | Desenvolupament econòmic ; Salaris ; Atur |
