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Discussion Paper Details

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Title: Wages and Productivity Growth in a Competitive Industry

Author(s): Helmut Bester and Emmanuel Petrakis

Publication Date: December 1998

Keyword(s): industry dynamics, Process Innovation and Wages

Programme Area(s): Industrial Organization

Abstract: Our model studies the evolution of productivity growth in a competitive industry. The exogenous wage rate determines the firms' engagement in labour productivity enhancing process innovation. There is a unique steady state of the industry dynamics, which is globally stable. In the steady state, the number of active firms, their unit labour cost and supply depend on the growth rate but not on the level of the wage rate. In addition to providing comparative statics of the steady state, the paper characterizes the industry's adjustment path.

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Bibliographic Reference

Bester, H and Petrakis, E. 1998. 'Wages and Productivity Growth in a Competitive Industry'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2031