Union games: technological unemployment

Summary. Given a production economy, we define union games by considering strategic behavior of the suppliers of factors. We refer to the Nash equilibria of this game as union equilibria. We analyze situations where the unemployment of factors is supported as a union equilibrium. The degree of unemployment depends on technological conditions. This allows us to model a source of unemployment which differs from the usual sources provided in the literature. We state a limit result that demonstrates that, as the market power of unions decreases, the corresponding sequence of union equilibria converges to the Walrasian equilibrium, that is, to full employment of factors. We also provide some examples that illustrate the main results.Received: 21 October 2004, Revised: 14 December 2004, JEL Classification Numbers: D51, C72. Correspondence to: Emma Moreno-GarcíaE. Moreno acknowledges financial support from the Research Grant BEC2000-1388-C04-01 (Ministerio de Ciencia y Tecnología and FEDER). G. Fernández de Córdoba and E. Moreno acknowledge financial support from the Research Grant SA091/02 from Junta de Castilla y León. We are indebted to C. Alós-Ferrer, C. Pita, D. Anisi, J. A. Ortega, F. Jimeno, J. P. Torres-Martínez, M. Steinert and C. Hervés for helpful comments and insights. We are particularly grateful to T. Kehoe and an anonymous referee for suggestions that improved this paper.     

The impact of monetary policy on unemployment hysteresis

This article investigates the hypothesis that the extent to which hysteresis occurs in the aftermath of recessions depends on monetary policy reactions. The degree of hysteresis is explained econometrically by the extent of monetary easing during a recession and by standard variables for labour market institutions in a pooled cross country analysis using quarterly data. The sample includes 40 recessions in 19 Organization for Economic Co-operation and Development (OECD) countries for which the required data is available. The time period lasts for the period from 1980 to 2007. This article builds on Ball (1999) and extends the sample of countries, the time period under investigation and the set of control variables.     

The distribution of technological progress

The size distribution of the domains of US-patented technological knowledge obeys an exponential law, revealing a disproportionable concentration of progress among larger domains. Our analyses suggest that this phenomenon is explained by a combination of two factors. First, domains’ trajectories of growth have inherently different potentials. Second, differences in domains’ potentials are magnified by a mechanism—domains’ self-hybridization—endogenous to the process of knowledge growth. Our results show that in addition to being stable, the observed distribution of technological progress is likely to arise under very general conditions.     

The impact of tax reforms on unemployment in a SMOPEC

This paper analyzes revenue-neutral tax reforms for a small open economy which is constrained to a balanced current account and whose producers have market power on the world market. We consider origin-based and destination-based commodity taxes as well as taxes on income, the payroll, and on an imported factor of production. Our main findings are the following. First, the strength, and for some parameter constellations, even the sign of the employment effect of tax reforms varies with the degree of openness of the economy. Second, the indeterminacy of the sign of the employment effect crucially hinges on the presence of an internationally mobile factor. The central mechanism underlying our results are adjustments of the real exchange rate which have repercussions on wage and price setting and therefore on employment.     

The impact of unemployment on inequality and poverty in OECD countries

The purpose of this research is to examine the contribution of unemployment to income inequality and poverty in various OECD countries. These relationships have been explored using Luxembourg Income Study micro-data. Considerable differences across OECD countries are revealed through the use of within-household unemployment distributions. These differences help to explain most of the observed divergences in the relationship between unemployment and income distribution, in conjunction with the heterogeneous influence of social benefits on the economic position of the unemployed in these countries. A sub-group decomposition analysis corroborates the limited effect of unemployment on income distribution in most of the considered countries. However, it seems clear that the unemployed are among those with the highest risk of experiencing poverty.
JEL classification: D31, I32, J31.     

Egalitarian wage policies, unemployment and skill-biased technological change

A popular explanation for the rise in European unemployment during the past decades is that relative wages failed to adjust to changes in relative productivities. Many economists reject this hypothesis on the ground that the ratios of low- to high-skill unemployment did not increase. Building on a search model, I argue that relative unemployment rates are affected by skill-neutral, as well as skill-biased shocks; hence stable ratios are theoretically consistent with a mix of skill-biased and skill-neutral shocks. Yet, numerical exercises confirm that wage rigidity in the face of skill-biased shocks probably did not explain much of the European unemployment experience.     

Volatility in productivity and the impact on unemployment

Volatility, and the uncertainty it creates, has long been recognized as a factor in economic decision making. Since hiring occurs before shocks to productivity are realized, firms’ investment in new labour is inherently risky. How large a role uncertainty in productivity has on aggregate unemployment is an empirical question that we attempt to answer. In this paper we measure the impact of higher volatility in labour productivity on the unemployment rate in the U.S. economy using a SVAR-GARCH-M model. Using the conditional standard deviation of productivity innovations from a multivariate GARCH model to measure uncertainty, we provide compelling evidence that unemployment increases with volatility. This estimated relative effect is actually larger for positive productivity shocks leading to unemployment declines only 60% as large as would have occurred using models that exclude uncertainty.     

Endogenizing technological progress: The MESEMET Model

This paper endogenizes technology and human capital formation in the MESEM model that was developed by van Sinderen (Economic Modelling, 1993, 13, 285–300). Tax allowances for private R & D expenditures and public expenditures on both education and R & D are effective instruments to stimulate economic growth. Simulations with respect to market clearing, the importance of supply-side elements and key parameters (such as the magnitude of spillovers and substitution elasticities) reveal that tax allowances for private R & D are the most robust instrument to increase economic growth through the accumulation of knowledge. Contrary to other studies that find that technology policies typically reduce employment, we find that overall employment rises.     

The impact of sectoral shifts and the aggregate labour market on unemployment duration

This study investigates the effects of sectoral shifts among industries on unemployment duration. These effects are decomposed into two subeffects: the overall effect and the specific industrial effect. The former is equal for all of the unemployed in all industries, while the latter depends on the tightness of the demand for labour of the industry in question. In addition, the impact of the aggregate labour market on unemployment duration is also explored. The empirical results show that most of the overall and all of the specific effects are significant, indicating that the sectoral shifts among industries as well as the aggregate labour market do in fact impact unemployment duration, and that the effects on unemployment duration vary in terms of their tightness in the different industrial labour markets.     

技术进步对能源消费回报效应的估算

"回报效应"是能源经济学中的一个著名命题,但在国内尚缺乏实证检验.本文以改革开放以来中国宏观经济能源消费数据为样本,对这一命题进行了计量检验.结果表明,在中国宏观经济层面上,"回报效应"在30-80%波动,而且20世纪90年代的平均回报率要明显低于20世纪80年代.对此进一步分析后本文认为"回报效应"将呈现三种趋势:"回报效应"越来越低;更多地体现为"硬"技术进步方面;更多地体现在生活部门.     

The impact of technological opportunity on the dynamics of trade performance

The paper examines statistically whether the degree to which countries are specialised in and/or increasingly move into sectors with above average levels of technological opportunity has any impact on growth in aggregate market shares of exports. A novelty of the paper is that it applies structural decomposition (SD) analysis not only on trade statistics, but also on US patent statistics. Nineteen countries and 17 manufacturing sectors for the period 1965–1988 are considered. A number of variables, in addition to the effects from the SD analysis, are included as explanatory variables. In this context, it is shown that there is a positive relationship between trade performance and the individual country’s ability to move into technological sectors offering above average technological opportunity.     

Endogenous technological change,income distribution,and unemployment with inter-class conflict

This paper presents a Kaleckian growth model that incorporates endogenous technological change. The model endogenously determines the rate of capacity utilization, the rate of economic growth, income distribution, and the employment rate in addition to technological change. The paper shows that whether or not an increase in the relative bargaining power of workers raises the long-run equilibrium unemployment rate depends on which regime is realized in the long-run equilibrium. If, for example, the long-run equilibrium corresponds to the wage-led growth regime, a rise in the relative bargaining power of workers leads to a decline in the unemployment rate. This result is never obtained from the mainstream NAIRU model.     

A model for bounded technological progress

This paper presents a simple model capable of handling empirical cases where technology is bounded. The theoretical model is illustrated using empirical data from the Swedish pulp industry, 1937–;78.     

A reformulation of the technological progress function

In its actual construction, the ordinary technological progress function is concluded to be theoretically defective, because, among other things, (1) it is not in keeping with the dynamic perspective in which technological change occurs, (2) it leaves unaccounted the nonlinearities involved in the learning process, and what is even more important, (3) it is not stochastically specified. Furthermore, it is unsuitable for long-term prediction from time-series data because it ignores a “limit of learning”, which is approached if not reached. Empirically also it is found to be grossly inadequate. A reformulation of the technological progress function is developed here by way of a solution to some of these problems and it is applied to a variety of cases. The role of availability of knowledge and complexity in engineering design process is also investigated in a preliminary way by means of two a priori hypotheses developed in the main body of the paper. Directions of further research are indicated.     

The Innovation impact model: a tool t0 study the impact of technological change

This article shows that the builders of interorganizational information systems (IOSs) struggle most with the problem of whether to build them alone or in an alliance mode. It is suggested that the situation should be studied in the light of the transaction costs involved in the application ofthe IOS. The nature of the application to be handled through the IOS should be the main detemrlnant of IOS design. According to the study, as derived from the transaction cost approach, applications with low transaction

costs are suitable for alliance networks whereas those with high transaction costs should be constructed from an organization's own resources. A market-hierarchy/decision-maker model for determining the righi way to participate in IOSs is introduced. There is a visible trend leading to a proportionally greater use of markets. Information technology lowers transaction costs, and more and more products and services become suitable for marketing through IOSs. A case example is dmwn from the Finnish Insurance Industry, where direct writing is the dominant governance structure. The transaction costs in motor vehicle insurance are studied.     

Heuristic modeling and technological impact analysis

This article examines the ways in which a financial simulation can be used to estimate the impact of an organization's technological environment on the financial, marketing, and logistical activities of the organization. A method is presented for using corporate financial models to perform technological impact analysis and a new technique introduced—heuristic modeling—that can facilitate such an analysis.     

The Innovation impact model: a tool t0 study the impact of technological change

In the spirit of the US Malcolm Baldridge Quality Award, companies try to develop a strategy towards improving their operations. These companies look for assistance in assessing how new technology will help. While literature looks at innovations from different perspectives, the impact of innovations is rarely studied. This article offers the 'Innovation Impact Model' as a tool to help companies visualize the effects of innovations on their performance and competitive situation. Three example are provided in which the Innovation Impact Model has been applied. First, the impact of basic oxygen furnaces on the national steel industries of Japan, West Germany, and the USA is examined. Second, the impact of eletric are furnaces on the development of production costs at the Atlantic Steel Plant in Atlanta is studied. Finally, it is shown how 'voluntary restraint agreements' in the early 1970s had only a tempoorary impact on improving the trade postion of the US steel industry.