Labour Market Frictions, Social Policies, and Barriers to Technology Adoption

Jess Morales ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: Barriers to technological changes have recently been shown to be a key element in explaining differences in output per worker across countries. This study examines the role that labour market features and institutions have in explaining barriers to technology adoption. I build a model that includes labour market frictions, capital market imperfections and heterogeneity in workers' skills. I found that the unemployment rate together with the welfare losses that workers experiment after displacement are key factors in explaining the existence of barriers to technology adoption. Moreover, I found that none of these factors alone is sufficient to build these barriers. The theory also suggests that welfare policies like the unemployment insurance system may enhance these kinds of barriers while policies like a severance payment system financed by an income tax seem to be more effective in eliminating them.

Keywords: Barriers to technology adoption; Unemployment; Unemployment insurance; Workers displacement; Welfare cost. (search for similar items in EconPapers)
JEL-codes: D69 E24 J65 O14 O33 (search for similar items in EconPapers)
Pages: 27
Date: 2004-11-19
New Economics Papers: this item is included in nep-dev, nep-dge, nep-ino and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:633.04

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