Loading...
Relative convergence in a dual economy with tradeable and non-tradeable goods
de Groot,H.L.F. van Schaik,A.B.T.M.
de Groot,H.L.F.
van Schaik,A.B.T.M.
Abstract
This paper develops a two-country two-sector endogenous growth model with a dual labour market based on efficiency wages. Growth is driven by Research done in the (high-tech) tradeable sector. The follower country tends to grow faster the greater the productivity gap from the leader country, but differences in unemployment benefit systems can lead to relative convergence, i.e. a steady state with the backward country lagging behind the leader country. The reason for this is that high social welfare benefits generate high unemployment and reduce the amount of labour employed for R&D purposes. Furthermore, it is shown that a shift in preferences towards non-tradeables can explain a global slowdown in economic growth.
Description
Pagination: 27
Date
1995
Journal Title
Journal ISSN
Volume Title
Publisher
Unknown Publisher
Files
Loading...
43.pdf
Adobe PDF, 436.49 KB
Research Projects
Organizational Units
Journal Issue
Keywords
Economic Growth, Wages, Unemployment, Growth Models, economic development, F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation, J64 - Unemployment: Models, Duration, Incidence, and Job Search, O41 - One, Two, and Multisector Growth Models, J41 - Labor Contracts, SDG 8 - Decent Work and Economic Growth
Citation
de Groot, H L F & van Schaik, A B T M 1995 'Relative convergence in a dual economy with tradeable and non-tradeable goods' CentER Discussion Paper, vol. 1995-43, Unknown Publisher.
License
info:eu-repo/semantics/restrictedAccess