Publication Type
Journal Article
Version
publishedVersion
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
Identifier
10.1111/1467-9361.00137
Publisher
Wiley
Citation
HOON, Hian Teck.
Endogenous Growth and Equilibrium Unemployment in a North-South Model of the World Economy. (2002). Review of Development Economics. 6, (1), 26-38.
Available at: https://ink.library.smu.edu.sg/soe_research/496
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/1467-9361.00137