Publication Type

Journal Article

Publication Date

2-2002

Abstract

A North-South model is developed which incorporates an endogenous rate of equilibrium unemployment in the North in the context of long-run growth. It is shown how increases in the size of public debt and unemployment compensation financed by payroll taxation, all measured relative to productivity, raise the Northern natural rate of unemployment and, consequently, reduce the global rate of long-run growth. The effect of the shocks is also to drive down the rate of employment expansion in the South. A set of the fundamental determinants of the world terms of trade is obtained, which includes policy parameters.

Keywords

Economic growth, growth models, employment, development

Discipline

Growth and Development | Labor Economics

Research Areas

Applied Microeconomics

Publication

Review of Development Economics

Volume

6

Issue

1

First Page

26

Last Page

38

ISSN

1363-6669

Publisher

Wiley

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=6068232&site=ehost-live

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