Karanassou, Marika; Snower, Dennis J. - School of Economics and Finance, Queen Mary - 2002
This paper provides a critique of the ``unemployment invariance hypothesis,'' according to which the behavior of the … labor market ensures that the long-run unemployment rate is independent of the size of the capital stock, productivity, and … the labor force. Using Solow growth and endogenous growth models, we show that the labor market alone need not contain all …