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| Author: | Gersbach, H. |
| Title: | Product market competition, unemployment and income disparities |
| Journal: | Weltwirtschaftliches Archiv
1999 : HEFT 2, VOL. 135:2, p. 221-240 |
| Index terms: | Unemployment Incomes Markets Labour Competition Products Europe |
| Language: | eng |
| Abstract: | In this paper, it is discussed how promoting competition in product markets affects unemployment and wage differentials. There is examined a general equilibrium model with imperfections in product and labour markets. FirmsÂ’ profits are part of the income of high-skilled people. It is illustrated in the paper how more intense competition reduces unemployment. A decrease of mark-ups would induce an increase of real wages if real wages were flexible. This enables the employment of more low-skilled people above a real reservation wage. More intensive competition, however, widens wage and income differences btw. low-skilled and high-skilled workers. |
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