A dynamic model of shirking and unemployment: Private saving, public debt, and optimal taxation

Brecher, Richard A.; Chen, Zhiqi; Choudhri, Ehsan U.

doi:10.1016/j.jedc.2010.03.009

Cited by 6 publications

(12 citation statements)

References 12 publications

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“…In equilibrium, like Brecher, Chen, andChoudhri (2010, p. 1394), the no-shirking Condition (5) holds with equality. From Equations ( 5), (7), and ( 8), the no-shirking condition can be expressed as:…”

Section: Utility Maximisationmentioning

confidence: 95%

“…Because workers could not be monitored perfectly, unemployment is needed to discipline workers from shirking in equilibrium. While Shapiro and Stiglitz (1984) focus on the steady state of the economy without capital accumulation, Kimball (1994) has explored the out-of-steady-state dynamics, and Brecher et al (2010) have further incorporated capital accumulation in their dynamic model addressing impact of different policies. The focuses in their models are significantly different from that in this model.…”

Section: Introductionmentioning

confidence: 99%

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The choice of technology in economic development

Wen

Zhou

2023

Australian Economic Papers

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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 firms to choose more advanced technologies, urban unemployment rate may decrease and agricultural sector employment may increase.

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Section: Utility Maximisationmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

The choice of technology in economic development

Wen

Zhou

2023

Australian Economic Papers

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“…These comments were based on the above-cited literature as well as on other publications regarding various factors of financial exclusion and savings, especially in the macroeconomic context. A group of inspirational materials included works by Gloukoviezoff (2011), Dabla-Norris et al (2019), Martinez Turegano & Herrero (2018, Gustman & Steinmeier (2015) and Brecher, Chen & Choudhri (2010). Also useful were some publications related to the specifics of financial exclusion in the USA (Karp & Nash-Stacey, 2015), Australia (Wilson, 2012), and East Asian countries (Han et al 2019;Park & Mercado, 2015;Horioka, 2010).…”

Section: Entrepreneurship and Sustainability Issuesmentioning

confidence: 99%

The problem of savings exclusion and gross savings in the new European Union member states

Huterski¹,

Huterska²,

Łapińska³

et al. 2020

JESI

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The problem of the exclusion of some households, in particular those less affluent, from the use of financial services available on the market, including savings, is an important issue in the literature due to the objectively identified negative social and economic consequences of such exclusion. The research objective of the article is to attempt to identify factors related to savings exclusion which determine the share of gross savings in GDP in the new European Union member states. To achieve the goal, a panel data model was estimated. The set of statistically significant factors that adversely affect the creation of gross savings in the economy, and thus the higher level of savings exclusion, include the unemployment rate, social contributions, household debt, the Gini coefficient, and the share of people aged 25-49 in the total population. All these variables are negatively correlated with the explained variable, which means that an increase in their value causes a fall in gross savings. The results of the research have shown that such a highly aggregated measure as gross savings in the economy can be useful for analysing selected aspects of savings exclusion occurring in the examined new member states of the EU.

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“…Based on this utility function, Strand (1987) examined the effects of heterogeneous workers on the labor market; Oi (1990) modeled unemployment in a dual labor market; Strand (1991) investigated how firm-specific shocks and moral hazard affect unemployment and wages; Meier (2002), Holzner et al(2010) examined the effect of work requirements for welfare recipients on the wage rate; Boeria and Jimeno (2005) analyzed employment protections in the labor market; Ose (2005) explored the relationship among working conditions, compensation and absenteeism. Skott (2006) examined over-education and wage inequality; Sparks (1986) highlighted the role of imperfect monitoring and dismissal threats in underpinning real wage rigidity; and Zenou & Smith (1995) and Zenou (2006) studied the worker's decision to live in central business district or urban-fringe; Phelps (1994) and Brecher et al (2010) generalized this model by incorporating asset accumulation and modifying the no-shirking condition.…”

Section: Literature Reviewmentioning

confidence: 99%

The Shapiro-Stiglitz Model with Non-constant Marginal Utility

2017

Open Economics

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Abstract:The Shapiro-Stiglitz model plays an important role in the employment theory. Woodford pointed out the theoretic limitation of the linear worker's utility function in that model. He questioned the model's implication of the secular decline in the unemployment rate when such rate was in fact trendless. He proposed to resolve this by allowing diminishing marginal utility of income. In this paper, the ShapiroStiglitz model is generalized using a nonlinear utility function implicit in the Stiglitz Efficiency-wage paper, thus linking these two well-known models. The nonlinear utility function in this generalized model not only allows for diminishing marginal utility of income but also allows for the analysis of parameters representing various factors affecting the secular unemployment rate. In particular, we can specify the condition under which the diminishing marginal utility can cause such rate to be trendless. JEL Classifications: E24; J31; J64

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A dynamic model of shirking and unemployment: Private saving, public debt, and optimal taxation

Cited by 6 publications

References 12 publications

The choice of technology in economic development

The choice of technology in economic development

The problem of savings exclusion and gross savings in the new European Union member states

The Shapiro-Stiglitz Model with Non-constant Marginal Utility

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