Unemployment Invariance
19 Pages Posted: 14 Aug 2002
Date Written: July 2002
Abstract
This paper provides a critique of the "unemployment invariance hypothesis," according to which the behavior of the labor market ensures that the long-run unemployment rate is independent of the size of the capital stock, productivity, and the labor force. Using Solow growth and endogenous growth models, we show that the labor market alone need not contain all the equilibrating mechanisms to ensure unemployment invariance; in particular, other markets may perform part of the equilibrating process as well. By implication, policies that raise the growth path of capital or increase the effective working-age population may influence the long-run unemployment rate.
Keywords: Unemployment, Employment, Wage Determination, Labor Supply, Capital Accumulation, Productivity, Technological Change, Economic Growth
JEL Classification: J21, J23, J30, J38, J64, J68
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
A Reappraisal of the Inflation-Unemployment Tradeoff
By Marika Karanassou, Hector Sala, ...
-
Adjustment Dynamics and the Natural Rate: An Account of UK Unemployment
By Dennis J. Snower, Brian Henry, ...
-
Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve and Economic Policy
By Marika Karanassou, Hector Sala, ...
-
Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve and Economic Policy
By Marika Karanassou, Hector Sala, ...
-
Phillips Curves and Unemployment Dynamics: A Critique and a Holistic Perspective
By Marika Karanassou, Hector Sala, ...
-
Unemployment in the European Union: A Dynamic Reappraisal
By Marika Karanassou, Hector Sala, ...
-
Staggered Wages and Output Dynamics Under Disinflation
By Guido Ascari and Neil Rankin