Workplaces in the Primary Economy and Wage Pressure in the Secondary Labor Market
BP2-STS
- Falkinger, Josef University of Zurich
- Grossmann, Volker ORCID University of Zurich
- 2003
Published in:
- Journal of Institutional and Theoretical Economics. - Mohr Siebeck. - 2003, p. 523-544
English
This paper develops a two-sector general-equilibrium model in which firms in the primary economy have to create workplaces prior to production and productmarket competition. For this, we introduce the endogenous sunk-cost approach with two-stage decisions of firms from IO in the macro labor literature. By hypothesizing that technological change has lowered marginal costs but has raised nonproduction requirements for providing workplaces, we are able to explain downsizing of low-skilled jobs in the primary economy despite wage flexibility ex ante. This leads to more accentuated labor-market segmentation, i. e., an increase in wage pressure in the secondary economy.
- Faculty
- Faculté des sciences économiques et sociales et du management
- Department
- Département d'économie politique
- Language
-
- English
- Classification
- Economics
- Other electronic version
- License
- License undefined
- Open access status
- green
- Persistent URL
- https://folia.unifr.ch/unifr/documents/322667
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