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Growth and unemployment

Objective



Research objectives and content
The main research objective is explore some links between unemployment and growth. Different ways will be followed. First of all, we will build a creative destruction model. By creative destruction we refer to the Schumpeterian view that associates economic growth and technical progress with a continuous structural change involving the 'death' of some productive activities (with the resulting destroyed jobs) and their replacement by more efficient activities (with the resulting created jobs). We will use a vintage capital growth model with complementariness of labor and capital. We will try explicitly to solve for the dynamics of job creation and destruction in sharp contrast to the existing literature on the same topic. We will show that convergence to the steady state growth path is oscillatory, due to endogenous replacement echoes. Hence, the model will allow to analyze the cyclical properties of job creation and destruction where the sole fluctuation source is endogenous. We will shed ligth on the economic mechanism at work in this kind of economies. In particular, we will show that the cyclical properties of job creation and destruction depend strongly on the initial distribution of jobs in the economy. Second of all, we will analyze the relationship between growth, unemployment and demand composition, and we will study fiscal policy effects on unemployment and growth. We will use a standard overlapping generation framework modified to incorporate matching frictions in the labor market, a technology capable of yielding unbounded endogenous growth and monopolistic competition with free entry and exit. In our model markup will be endogenous and it will depend on demand composition. Therefore, changes in propensity to save affect not only growth, but also employment. This relationship will be studied. Finally, we will build a model of heterogenous micromarkets. Markups and utilization of factors will differ across markets. Implications of this heterogenousness on subutilization of factors and markups will be studied. We think that aperiodic fluctuations in markups, utilization of factors, number of firms and output could rise in this economy.
Training content (objective, benefit and expected impact)
The CEPREMAP is involved in theoretical and applied research on macroeconomic theory, being one of the top european institution in economic research. The group that will host me is composed of some of the macroeconomic researchs of CEPREMAP: J. Adda, J.P. Binassy, P. Fhve, P.Y. Hinin, J. P. Laffargue, F. Langot, P. Malgrange, F. Portier. All of whom publishing in the most reputed professional journals. I hope to benefit from my collaboration with all of whom. I have an especial interest in Dynamic General Equilibrium Macro Models with Imperfect competition and I will be involved in the current research project of CEPREMAP on this topic.
Links with industry / industrial relevance (22)

Coordinator

CENTRE D'ETUDES PROSPECTIVES D'ECONOMIE MATHEMATIQUE APPLIQUEES A LA PLANIFICATION
Address
Rue Du Chevaleret 142
75013 Paris
France

Participants (1)

Not available
Spain