Income Distribution and Employment : A Comparative study of Major OECD Countries
(1983) , 33 pages
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- Abstract
- (en) During recent years unemployment has risen in virtually all OECD economies reflecting slower or negative growth in employment. Among the explanations usually advanced figure prominently the supply shocks of the seventies, which have imposed on OECD countries the need for major structural adjustments. These adjustments are however very slowly forthcoming, mainly due to wage and other rigidities, so that the decline of activity in many economic sectors has not been compensated by increased activities from new investments. Wage rigidities themselves, in the face of external terms of trade losses, have given rise to declining profit shares of the corporate sector and this decline in profits is often considered as a major reason for the observed reduction in gross capital formation and hence of employment. Furthermore, high real wage costs relative to profits encourage labour-saving investments so that a larger part of already reduced capital formation is used for replacing jobs by machines instead of creating additional employment.
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Citations
Steinherr, A. (1983). Income Distribution and Employment : A Comparative study of Major OECD Countries (Working Papers Institut des sciences économiques 8307). https://hdl.handle.net/2078.5/279035