Economic growth, sectoral structure and unemployment

This thesis consists of three parts that deal with the relationship between the relative wealth of nations, economic growth, and the sectoral structure of economies. In the first part, the focus is on the relative stagnancy of Europe versus the USA in terms of productivity levels and unemployment. It is argued that generous social security systems in Europe and the high-fixed-cost technologies employed in the USA put the USA in a relatively advantageous position to perform Research and Development. Part two explicitly considers the relationship between growth and unemployment in the context of a dual labour market. This part examines how the organization of work, competition, the generosity of the social security system, the presence of trade unions, and institutional designs that link unemployment benefits to previous earnings affect both growth and unemployment. In part three, the determination, development, and social optimality of the sectoral composition of economies is discussed. Differential productivity growth between sectors, non-unitary income elasticities of demand, and outsourcing of non-core activities are shown to be important candidates for explaining the observed process of deindustrialization in advanced economies.