Tuesday, July 30, 2019

Structural Economic Dynamics, Markups, Real Wicksell Effects, And The Reverse Substitution Of Labor

I am being published in Structural Change and Economic Dynamics. Currently, this link is without my corrections to proofs, I guess.

Research highlights:

  • Technical progress and variations in industry markups can change characteristics of the labor markets.
  • A numeric example illustrates the theory of the choice of technique.
  • In the example, switch points are created and destroyed with varying coefficients of production and varying markups.
  • Around some switch points, higher wages are associated with greater employment, given the level of net or gross output
  • Graphical displays are provided for visualizing these results.

Abstract: This article presents an example in which perturbations in relative markups and technical progress result in variations in characteristics of the labor market. Around a switch point with a positive real Wicksell effect, a higher wage is associated with firms wanting to employ more labor per unit output of net product. Around a switch point with a reverse substitution of labor, firms in a particular industry want to hire more labor per unit output of gross product. Technical progress and variations in markups can bring about and take away circumstances favorable for workers wanting to press claims for higher wages. This article presents specific fluke switch points in which variations in technology and markups change these circumstances, as well as novel diagrams for visualizing the effects of such variations.

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