TY - JOUR
T1 - Unemployment and catching up
T2 - Europe vis-à-vis the USA
AU - De Groot, Henri L.F.
AU - Van Schaik, Anton B.T.M.
PY - 1997
Y1 - 1997
N2 - This paper develops a two-region two-sector endogenous growth model with a dual labour market based on efficiency wages. Growth is driven by research done in the (high-tech) tradeables sector. The follower region tends to catch up in terms of labour productivity with the leader region. Differences in unemployment compensation systems can lead to relative convergence, i.e., a steady state with the backward region lagging behind the leader region. The reason for this is that high social welfare compensations generate high unemployment and reduce the amount of labour employed for R&D purposes.
AB - This paper develops a two-region two-sector endogenous growth model with a dual labour market based on efficiency wages. Growth is driven by research done in the (high-tech) tradeables sector. The follower region tends to catch up in terms of labour productivity with the leader region. Differences in unemployment compensation systems can lead to relative convergence, i.e., a steady state with the backward region lagging behind the leader region. The reason for this is that high social welfare compensations generate high unemployment and reduce the amount of labour employed for R&D purposes.
KW - Catching up
KW - Dual economy
KW - Efficiency wages
KW - Endogenous growth
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U2 - 10.1023/A:1002990104412
DO - 10.1023/A:1002990104412
M3 - Article
AN - SCOPUS:0031471482
SN - 0013-063X
VL - 145
SP - 179
EP - 201
JO - Economist
JF - Economist
IS - 2
ER -
