2004 | OriginalPaper | Buchkapitel
Efficiency Wages
verfasst von : Martin Zagler
Erschienen in: Growth and Employment in Europe
Verlag: Palgrave Macmillan UK
Enthalten in: Professional Book Archive
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This chapter establishes a theoretical relation between the level of unemployment and the economic rate of growth. It is posited that in a model with a monopolistically competitive manufacturing sector and a competitive innovation sector, both of which pay efficiency wages, the equilibrium unemployment rate — the Nawru — exhibits an unambiguously negative impact on the long-run growth performance, because it reduces the innovative capacity of the economy. Only if efficiency levels are different across sectors can a causal relation from the growth rate to the level of unemployment be established, since a lower level of innovation shifts the burden of inducing efficiency towards the manufacturing sector, thus fostering unemployment.