Sustainable Capitalism: Full-Employment Flexicurity Growth with Real Wage Rigidities

Arbeitspapier

In this paper we present a model of flexicurity capitalism that exhibits a second labor market with the government as an employer of first resort, where all workers not employed by firms in the private sector find meaningful employment. We show that the model exhibits a unique interior steady state which is asymptotically stable under real wage adjustment dynamics of the type considered in Blanchard and Katz (1999), and under a type of Okun's Law that links the level of utilization of firms to their hiring and firing decision. The introduction of a company pension fund can be shown to contribute to the viability of the analyzed economic system. However, when credit is incorporated in the model, in place of savings-driven supply side fluctuations in economic activity, investment-driven demand side business cycle fluctuations (of a probably much more volatile type) can take place.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IMK Working Paper ; No. 5/2010

Classification and Topics

• Classification: Wirtschaft
• Subject: Flexicurity ; employer of ¯rst resort ; Solovian growth ; company pension funds ; sustainability ; Flexicurity ; Neoklassisches Wachstumsmodell ; Lohnrigidität ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Asada, Toichiro ; Flaschel, Peter ; Greiner, Alfred ; Proaño, Christian
• Event: Veröffentlichung
• (who): Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
• (where): Düsseldorf
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/105931
• URN: urn:nbn:de:101:1-201101312835
• Last update: 10.03.2025, 11:43 AM CET