Can We Grow Out of Unemployment? : The Lessons of a Neoclassical Analysis

The paper evaluates the effectiveness of growth as a remedy for unemployment in the face of a wage minimum in a Solow-Ramsey growth model. It is shown that growth alone will be sufficient to eventually eliminate any quantity of unemployment, as long as the minimum wage is not set "too high." However, a plausible calibration of parameters indicates that the elimination of even a moderate quantity of unemployment by the process of capital accumulation may take more than two decades