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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Workplaces in the primary economy and wage pressure in the secondary labor market |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of Institutional and Theoretical Economics |
| Publisher | Mohr Siebeck |
| Geographical Reach | international |
| ISSN | 0932-4569 |
| Volume | 159 |
| Number | 3 |
| Page Range | 523 - 544 |
| Date | 2003 |
| Abstract Text | This paper develops a two-sector general-equilibrium model in which firms in the primary economy have to create workplaces prior to production and product market competition. For this, we introduce the endogenous sunk-cost approach with two-stage decisions of firms from IO in the macro labor literature. By hypothesizing that technological change has lowered marginal costs but has raised nonproduction requirements for providing workplaces, we are able to explain downsizing of low-skilled jobs in the primary economy despite wage flexibility exante. This leads to more accentuated labor-market segmentation, i.e., an increase in wage pressure in the secondary economy. |
| Digital Object Identifier | 10.1628/0932456032954729 |
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