A Theory of Employment in Firms

In a modern economy, production and competition require internal interaction of individuals in firms. The book provides a systematic treatment of the macroeconomic consequenses of this fact. For this purpose the concept of a two-stage monopolistic competition equilibrium is introduced into macroeconomic theory. Firms choose the capacity to organize internal interaction at stage 1 and compete at stage 2. The concept allows a rigorous analysis of the provision of work places and the economic determinants of the employable work force. The book explains why in the equilibrium of a market economy, even under flexible wages, no jobs may be provided for people who are employable from an efficiency point of view. The economic determinants of equilibrium employment covered by the analysis of the book are: New forms of work organization, changes in the skill structure of the labor force, market power of key factors for organization, expectations of investors and international capital movements.

Contenu

1.1 A new theory.- 1.2 (Un)employment.- 1.3 Work organization and macroeconomic equilibrium.- 1.4 Skill bias and skill requirements.- 1.5 Other sources of unemployment.- 1.6 Main result and organization of the book.- The basic model.- 2.1 Endowment, technology, demand and market structure.- 2.1.1 Labor supply.- 2.1.2 Organization technology.- 2.1.3 Production technology.- 2.1.4 Demand in the goods market.- 2.1.5 Firm behavior and equilibrium.- 2.2 Prices and production in the monopolistic competition equilibrium (stage 2).- 2.2.1 The goods market.- 2.2.2 The labor market.- 2.3 The equilibrium provision of work places (stage 1).- 2.4 The macroeconomic equilibrium: Summary and discussion.- 2.4.1 Equilibrium employment.- 2.4.2 The ratio of non-production labor to labor in production.- 2.4.3 Equilibrium prices and wages.- Unemployability and involuntary unemployment.- 3.1 Equilibrium employment vs. efficient level of employment.- 3.2 Unemployment under wage rigidity.- 3.3 Market power of firms and rents for firm owners.- 3.3.1 The role of market power in a zero profit equilibrium.- 3.3.2 The role of rents for firm-owners.- 3.4 Employment when firms have uncertain expectations.- 3.4.1 Unanticipated shocks.- 3.4.2 Macroeconomic equilibrium and the state of long-term expectations.- Equilibrium reorganization of work and aggregate level of employment.- 4.1 Employment under different organization technologies and the available range of abilities.- 4.2 Central coordination versus decentralized communication.- 4.2.1 Central coordination.- 4.2.2 Decentralized communication.- 4.3 The adoption of organization technologies by firms.- 4.4 Equilibrium employment after reorganization.- 4.4.1 Equilibrium with dominating reorganization technology.- 4.4.2 Equilibrium with non-dominating reorganization technology.- 4.5 Job creation, job destruction and lean management.- 4.5.1 Is reorganization harmful for employment?.- 4.5.2 Is reorganization successful in bringing down the ratio of non-production to production work?.- 4.5.3 Some remarks on the role of shareholder orientation and globalization for the reorganization of work.- Skilled and unskilled labor.- 5.1 Skilled labor as a limiting factor.- 5.2 Extension of the basic model to two types of labor.- 5.2.1 Endowment and technology.- 5.2.2 Monopolistic competition at stage 2.- 5.2.3 The firms' provision of work places at stage 1.- 5.2.4 Aggregate employment and wages implied by the behavior of firms.- 5.3 Employment and skill structure of jobs in the macroeconomic equilibrium.- 5.4 The role of skill supply and technological change for the employment of unskilled labor.- 5.4.1 Supply of skilled labor and (un-)employment of unskilled labor.- 5.4.2 The impacts of technological change.- 5.5 (Un)employment of skilled and unskilled labor when highskilled workers have the power to acquire a rent.- 5.5.1 Rigidity of the relative wage of skilled labor.- 5.5.2 Rents of non-production workers.- Capital and the provision of work places.- 6.1 Introducing capital into the basic model.- 6.2 Employment and interest rate in the macroeconomic equilibrium.- 6.3 Comparative-static analysis of the macroeconomic equilibrium.- 6.3.1 Equilibrium employment and interest rate as functions of capital supply.- 6.3.2 The effects of a change in the non-production requirements of organizing work.- 6.3.3 Size of the labor force and return on capital.- 6.4 The macroeconomic equilibrium when capital supply is elastic.- 6.4.1 Equilibrium in a perfect capital market.- 6.4.2 The impact of capital market imperfections on employment.- 6.5 Capital mobility and employment.- 6.5.1 Equilibrium in a small open economy.- 6.5.2 International equilibrium with and without capital mobility.- Investment and savings. Supply-side vs. demand-side macroeconomic equilibria.- 7.1 The relationship between investment, savings and other macroeconomic variables.- 7.1.1 Macroeconomic relationships in a monopolistic competition equilibrium (stage 2).- 7.1.2 Relationships between macroeconomic variables in a two-stage equilibrium.- 7.1.3 Equilibrium accumulation.- 7.2 Supply side vs. demand side in the equilibrium at stage 2.- 7.2.1 Full utilization of capacity.- 7.2.2 Underutilization of capacity when macroeconomic activity is constrained by effective demand.- 7.3 Equilibrium accumulation and equilibrium provision of jobs when firms are supply oriented.- 7.4 Equilibrium employment and equilibrium accumulation when firms have pessimistic demand expectations.- 7.4.1 Demand-determined two-stage equilibrium.- 7.4.2 Investment and savings in a demand-determined equilibrium.- Summary.- A. Appendix to Chapter 2.- B. Appendix to Chapter 6.- References.- Author index.