Structural Reform and Economic Policy by Robert M. Solow (eds.)

By Robert M. Solow (eds.)

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Therefore, the key questions are: • Do product-market reforms yielding uneven technological progress raise aggregate employment – contrary to the ‘conventional wisdom’? • Might unawareness of general equilibrium effects explain the lack of product-market reforms? The issues are related to work8 by Blanchard (1998) and Cohen and Saint-Paul (1994), who have pointed out that uneven technical progress may lead to higher unemployment when technical progress widens the productivity differential between different sectors.

If tax effects were taken into account, bargaining agents would even be more cautious in wage-setting under this complete form of GEB. Hans Gersbach 21 6. Simulations of such learning processes are available upon request. 7. See, for example, MGI (2002) and also Baily (1993), Baily and Gersbach (1995) and Baily and Solow (2001). 8. The question of how productivity improvements in one industry affect employment in the economy is by no means new. The modern answers date back at least to Baumol (1967).

394. ————(2002) ‘Uneven Technical Progress and Unemployment’, IZA Discussion Paper, no. 478. Gersbach, H. and G. Sheldon (1996) ‘Structural Reforms and their Implications for Macroeconomic Policies’, Macroeconomic Policies and Structural Reform (Paris: OECD), pp. 131–67. Green, A. and D. Mayes (1991) ‘Technical Inefficiency in Manufacturing Industries’, Economic Journal, vol. 101, pp. 523–38. Hay, D. and G. ’, Economic Journal, vol. 107, pp. 597–617. Hellwig, M. and M. Neumann (1987) ‘Economic Policy in Germany: Was there a Turnaround’, Economic Policy, vol.

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