This paper introduces technological progress into an efficiency wage model, and argues that changes in the rate of technical change affect not only the demand for but also the effective supply of labour. This creates a new mechanism through which technological progress impacts on the wage of...

Many OECD economies suffered a productivity slowdown beginning in the early 1970s. However, the increase in unemployment that followed this slowdown was more pronounced in European economies relative to the US. In this paper we present an efficiency wage model, which enables us to identify five...

One-sector R&D-based models predict scale effects, which is empirically inconsistent. This is due to the "knife-edge" assumption that new ideas created are linear in the stock of knowledge. If this assumption is dropped to make a one-sector R&D-based model consistent with data, growth becomes...