Industrialization Jobs Creation and Wages Incentives

Faria, Joao and Jellal, Mohamed (2009): Industrialization Jobs Creation and Wages Incentives.

Abstract

An optimizing representative firm pays efficiency wages to skilled workers to produce technological innovations, which are assumed to be of labor saving type, affecting negatively the hiring rate of unskilled workers. The results are: i) The efficiency wage of skilled workers is determined by the Solow condition; ii) There is underemployment of unskilled workers whenever the added value of innovations is greater than the opportunity cost of skilled workers’ wages; iii) The optimal level of technology is independent of technological parameters; iv) The employment of skilled workers increases with the level of technology and decreases with the efficiency wage; v) The employment of unskilled workers is not necessarily negatively affected by technological innovations in the steady state.

• Item Type: MPRA Paper
• Language: English
• Keywords: Unemployment; Dynamic Efficiency Wage Model; Technological Change
• Subjects: J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; D - Microeconomics > D9 - Intertemporal Choice > D92 - Intertemporal Firm Choice, Investment, Capacity, and Financing

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