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Growth, income distribution and unemployment in a two‐sector economy
Author(s) -
Chattopadhyay Subhasankar
Publication year - 2020
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12299
Subject(s) - economics , unemployment , consumption (sociology) , investment (military) , distribution (mathematics) , growth model , full employment , capital (architecture) , labour economics , income distribution , commodity , capital accumulation , capital good , aggregate demand , capital intensity , general equilibrium theory , monetary economics , macroeconomics , economy , goods and services , human capital , market economy , inequality , monetary policy , social science , mathematics , law , history , mathematical analysis , archaeology , sociology , political science , politics
We build a two‐sector general equilibrium growth model with capital‐intensive consumption goods and a labour‐intensive investment goods sector to investigate the coexistence of growth and unemployment. The model uses heterogeneity in saving behaviour, introduces an effective demand problem, has full employment of capital with input non‐substitutability and shows that the aggregate labour employment is determined by available capital along with commodity market equilibrium. The long‐run growth may not be balanced, and under biased growth, the level of unemployment may monotonically increase or decrease over time, or may first increase (decrease) and then decrease (increase). Such possible unemployment paths help us tightly define “jobless growth”.