Hostname: page-component-cd9895bd7-mkpzs Total loading time: 0 Render date: 2024-12-27T06:45:27.271Z Has data issue: false hasContentIssue false
  • English
  • Français

Unemployment and Capacity Under-Utilisation in a Tobin’s q Model

Published online by Cambridge University Press:  17 August 2016

David de La Croix
David de La Croix*
Affiliation:
FNRS & Université catholique de Louvain
Get access

Summary

A dynamic contracting model with endogenous prices, wages and investment is presented. It accounts for capital and labour underutilization at steady state and displays various patterns of unemployment rate and capacity utilization rate co-movements as a function of demand and supply shocks. The main determining elements of unemployment are the unit cost of capital, the intensity of competition in the product market, the magnitude of uncertainty and union characteristics.

Résumé

Résumé

On présente un modèle dynamique de contrat efficient entre entreprises et syndicats où prix, salaires et investissements sont endogènes. Ce modèle rend compte de la sous-utilisation du travail et de l’équipement à l’état stationnaire et montre différents types de co-mouvements entre chômage et taux d’utilisation des capacités, en fonction de chocs de demande et d’offre. Les éléments essentiels qui déterminent le taux de chômage sont le coût unitaire du capital, le degré de concurrence sur le marché des biens, l’ampleur de l’incertitude et les caractéristiques des syndicats.

Keywords

E20E20.
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 61 , Issue 4 , 1995 , pp. 403 - 431
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1995 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

(*)

I am most grateful to Torben Andersen, Christian Arnsperger, Raouf Boucekkine, Jean-Bernard Chatelain, Philippe Devillé, Jacques Drèze, Horst Entorf, Jean-François Fagnart, Marcel Lever, Omar Licandro, Franz Palm, Henri Sneessens, to the participants to the seminars in Antwerp (UFSIA) and Maastricht (RL), to the participants to the Winter Meeting of the Econometric Society (London, 1993), to the participants to the SPES project CT91-0079 and to the two referees for their comments. This text presents research results of the Belgian programme on Interuniversity Poles of Attraction initiated by the Belgian State, Prime Minister’s office.

References

Arnsperger, C. and Dela Croix, D. [1990], Wage Bargaining with a Price-Setting Firm, Bulletin of Economic Research, 42(4), pp. 285–298.Google Scholar
Arnsperger, C. and De La Croix, D. [1993], Bargaining and Equilibrium Unemployment: Narrowing the Gap between New Keynesian and Disequilibrium Theories, European Journal of Political Economy, 9(2), pp. 163–190.Google Scholar
Anderson, S. and Devereux, M. [1988], Trade Unions and the Choice of Capital Stock, Scandinavian Journal of Economics, 90(1), pp. 27–44.Google Scholar
Blanchard, O. and Fisher, S. [1989], Lectures on Macroeconomics, Cambridge, Mass. & London, MIT Press.Google Scholar
Card, D. [1986], Efficient Contracts with Costly Adjustment: Short-Run Employment Determination for Airline Mechanics, American Economic Review, 76, pp. 1045–1071.Google Scholar
de la Croix, [1993], Externalities in Wage Formation and Structural Unemployment, Annales d’Economie et de Statistique, 32, pp. 17–42.Google Scholar
de la, Croix D. and Fagnart, J.F. [1995], Underemployment of Production Factors in a Forward-looking Model, Labour Economics, 2(2), pp, 131–159.Google Scholar
de la, Croix D. and Lubrano, M. [1995], Are Real Interest Rate Responsible for Unemployment in the Eighties? A Bayesian Analysis of Cointegrated Relationships with a Regime Shift, in Fomby, T. (ed.), Advances in Econometrics – Bayesian Methods Applied to Time Series, Greenwich, Jai Press, forthcoming.Google Scholar
Devereux, M. and Lockwood, B. [1991], Trade Unions, Non-Binding Wage Agreements and Capital Accumulation, European Economic Review, 35(7), pp. 1411–1426.Google Scholar
Dowrick, S. [1989], Union-Oligopoly Bargaining, The Economic Journal, 99 (398), pp. 1123–1142.Google Scholar
Dreze, J. and Bean, C. [1990], European Unemployment: Lessons from a Multi-Country Econometric Exercise, in Drèze, J. et al., Europe’s Unemployment Problem, Cambridge, Mass. & London, MIT Press.Google Scholar
Eberwein, C. and Kollintzas, T. [1995], A Dynamic Model of Bargaining in a Unionized Firm with Irreversible Investment, Annales d’Economie et de Statistique, n° 37/38, pp. 91–116.Google Scholar
Espinosa, P. and Rhee, C. [1989], Efficient Wage Bargaining as a Repeated Game, Quarterly Journal of Economics, 104(4), pp. 565–588.Google Scholar
Grout, P. [1984], Investment and Wages in the absence of Binding Contracts: A Nash Bargaining Approach, Econometrica, 52(2), pp. 449–460.Google Scholar
Hayashi, F. [1982], Tobin’s Marginal q and Average q: A Neoclassical Interpretation, Econometrica, 50(1), pp. 213–224.Google Scholar
Holmlund, B. [1989], Wages and Employment in Unionized Economies: Theory and Evidence, in Holmlund, B. Lofgren, K.-G. and Engstrom, L., Trade Unions, Employment, and Unemployment Duration, Oxford – New York, Toronto & Melbourne, Clarendon Press.Google Scholar
Lambert, J.-P. [1988], Disequilibrium Macroeconomic Models, Cambridge, Cambridge University Press.Google Scholar
Layard, R. and Nickell, S. [1990], Is Unemployment Lower if Unions Bargain over Employment?, Quarterly Journal of Economics, 105(3), pp. 773–787.Google Scholar
Licandro, O. [1990], Investment and the Stock market in Quantity Rationing Models, Ph.D. Thesis, Université Catholique de Louvain.Google Scholar
Licandro, O. [1992], Investment Dynamics and Capacity Utilization in Monopolistic Competition, Annales d’Economie et de Statistique, n° 27, pp. 91–113.Google Scholar
Lockwood, B. and Manning, A. [1989], Dynamic Wage-Employment Bargaining with Employment Adjustment Costs, Economic Journal, 99(398), pp. 1143–1158.Google Scholar
Manning, A. [1994], How Robust is the Microeconomic Theory of the Trade Union?, Journal of Labor Economics, 12(3), pp. 430–459.Google Scholar
Modigliani, F., Monti, M. Drèze, J. Giersch, H. and Layard, R. [1987], Reducing Unemployment in Europe: The Role of Capital Formation, in Layard, R.R. and Calmfors, L. (eds.), The Fight Against Unemployment, Cambridge, Mass. & London, MIT Press.Google Scholar
Rotemberg, J. and Woodford, M. [1993], Dynamic General Equilibrium Models with Imperfectly Competitive Product Markets, paper presented at the International Conference on the Macroeoconomics of Imperfect Competition, Paris.Google Scholar
Schiantarelli, F. and Georgoutsos, D. [1990], Monopolistic Competition and the Q Theory of Investment, European Economic Review, 34(5), pp. 1061–1078.Google Scholar
Sneessens, H. [1987], Investment and the Inflation-Unemployment Trade off in a Macroeconomic Rationing Model with Monopolistic Competition, European Economic Review, 31(3), pp. 781–815.Google Scholar
Strand, J. [1989], Monopoly Union versus Efficient Bargaining, a Repeated Game Approach, European Journal of Political Economy, 5(4), pp. 473–486.Google Scholar
Van Der Ploeg, F. [1987], Trade Unions, Investment, and Employment – A Non-cooperative Approach, European Economic Review, 31(7), pp. 1465–1492.Google Scholar