Jobless Growth: Appropriability, Factor Substitution, and Unemployment

Posted: 20 Nov 1998

See all articles by Ricardo J. Caballero

Ricardo J. Caballero

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Mohamad L. Hammour

Ecole Normale Superieure (ENS); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: September 1997

Abstract

A central determinant of the political economy of capital-labor relations is the appropriability of specific quasi-rents. This paper is concerned with the general-equilibrium interaction of appropriability and characteristics of technology--namely, the embodiment of technology in capital and capital-labor substitutability in the technological menu. Technological embodiment means that the supply of capital is effectively much less elastic in the short than in the long run and is therefore more exposed to appropriability; technology choice implies that an attempt at appropriating capital will induce a substitution away from labor in the long run and constitutes a mechanism to thwart appropriation. Shifts in European labor relations in the last three decades offer a good laboratory to explore the empirical relevance of those mechanisms. The evolution of the labor share, the profit rate, the capital/output ratio, and unemployment--which we examine more particularly in the case of France--appears highly supportive.

JEL Classification: E24, E25, J3, J41

Suggested Citation

Caballero, Ricardo J. and Hammour, Mohamad L., Jobless Growth: Appropriability, Factor Substitution, and Unemployment (September 1997). MIT Department of Economics Working Paper No. 97-18. Available at SSRN: https://ssrn.com/abstract=140066

Ricardo J. Caballero (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Mohamad L. Hammour

Ecole Normale Superieure (ENS) ( email )

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France
+33 143 136 305 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

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United Kingdom

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