Uneven Technical Progress and Unemployment
23 Pages Posted: 27 May 2002
Date Written: September 2003
In a two-sector-economy with real wage rigidity, we examine how technical progress in one sector affects aggregate unemployment. We show that aggregate unemployment decreases for uneven technical change in the case of Cobb-Douglas production functions. For every type of technical progress there are also elasticities of substitution in production and utility functions leading to a rise in unemployment. Moreover, we identify polar cases when unemployment strongly decreases.
Keywords: Uneven Technical Progress, Elasticities of Substitution, Unemployment
JEL Classification: D58, E24, J60, L13
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