Imperfect Labor Market and Convergence : Theory and Evidence for some OECD Countries

In this paper we show the existence of a negative relationship between long run growth and labor market imperfections both theoretically and empirically. We consider a “monopolistic union” imperfect labor market in a neoclassical growth framework and show that labor market rigidity, captured by the mark-up over the reservation wage, does lower the growth… CONTINUE READING