erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Unemployment in the Current Economic Debate: The Role of Technology and Structural Change

Marco Vivarelli (Catholic University of P iacenza, Italy)

Abstract  

In this paper, two different meanings of “structural unemployment” are contrasted. In the first view (mainstream), persistent unemployment is seen as an effect of rigidities within the labour market. In the second view (classical), persistent unemployment is seen as a consequence of an economic structure which is labour-unfriendly, that is dominated by capital intensive sectors and labour-saving technical change. While the mainstream view is criticized through the discussion of the unpleasant countereffects of labour market reform, economic theory is used to criticizing the so-called “compensation theory”, that is the belief that market forces automatically counterbalance the labour displacements due to labour-saving technical change. If labour market reform is socially costly and strucural factors such as technical change and sectoral specialization do matter, alternative (or at least additional) policies can be proposed in order to cope with structural unemployment. Here the call is for targeted industrial and innovation policies.

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