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The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou
The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou
Economics Faculty Publications
The impact of capital accumulation on job creation is an important and interesting issue in economic development. This model provides a general-equilibrium framework for studying technology choice with unemployment in a developing economy based on micro-foundations. Unemployment in the urban sector results from the existence of efficiency wages. Manufacturing firms engage in oligopolistic competition and choose technologies to maximise profits. A more advanced technology uses more capital and less labour. In the steady state, an increase in the amount of capital induces firms to choose more advanced technologies and the wage rate increases. While a higher capital stock always induces …
Search, Technology Choice, And Unemployment, Constantine Angyridis, Haiwen Zhou
Search, Technology Choice, And Unemployment, Constantine Angyridis, Haiwen Zhou
Economics Faculty Publications
Technology variations among countries account for a significant part of their income differences. In this paper, a firm's technology choice is embedded in a search theoretic framework for unemployment. More advanced technology is assumed to have a higher setup cost, but it is more productive. The model is tractable and the following results are derived analytically. An increase in the unemployment benefit leads to an increase in the equilibrium wage rate, giving an incentive to firms to choose a more advanced technology. Thus, this result regarding unemployment insurance in models with wage posting carries through with Nash bargaining as well. …
A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou
A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou
Economics Faculty Publications
In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as a fixed cost of production, increasing returns in the manufacturing sector exist. In the unique steady state, first, when individuals become more patient, the savings rate increases while the level of an individual’s income decreases. Second, an increase in population or percentage of income spent on manufactured goods does not change steady-state technology while the level of an individual’s income decreases. Third, an increase in the wage rate leads manufacturing firms to choose more …
The Choice Of Technology And Equilibrium Wage Rigidity, Haiwen Zhou
The Choice Of Technology And Equilibrium Wage Rigidity, Haiwen Zhou
Economics Faculty Publications
In this general equilibrium model, firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Capital and labor are the two factors of production. The existence of efficiency wages leads to unemployment. The model is able to explain some interesting observations of the labor market. First, even though there is neither long-term labor contract nor costs of wage adjustment, wage rigidity is an equilibrium phenomenon: an increase in the exogenous job separation rate, the size of the population, the cost of exerting effort, and the probability that shirking is detected will not change the equilibrium wage rate. …