Unemployment Persistence and Capital Shortage: The Case of Trinidad and Tobago

Author/Editor:

Benedikt Braumann

Publication Date:

June 1, 1997

Electronic Access:

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Summary:

This paper examines the link between capital stock and unemployment persistence. An overlapping-generations model with endogenous labor supply and imperfect competition is presented. It is used to interpret the unusual persistence of unemployment in Trinidad and Tobago during the last twenty years. Although real wages are 60 percent lower today than in the mid-1980s, unemployment continues to be very high. The paper argues that an important part of the explanation lies in the decline of capital stock in this country after years of very low savings and investment. Policies to address this capital shortage are discussed.

Series:

Working Paper No. 1997/077

Subject:

Employment Financial institutions Labor Real wages Stocks Unemployment

English

Publication Date:

June 1, 1997

ISBN/ISSN:

9781451956719/1018-5941

Stock No:

WPIEA0771997

Pages:

26

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