(a)

%

11

9

7

5

3

1

-1

-3

-5

(b)

%

11

9

7

5

3

1

-1

-3

-5

-----Belgium     —*— I reland .........Italy
%

11 1

9 -

7 -

5 -

3 -

1 -

-1 -

-3 -

----Germany    —*—France .........UK

-5 ^j

----USA   —*— Sweden .........Canada

Figure 2: GNP Per Capita Growth for Country Groups.

Source: World Bank

2 Review of Literature

Recently, expanding literature focuses, on the one hand, mainly on unemployment
and technical progress - usually in growth-matching models that neglect the influ-
ence of different steady-state capital intensity levels on unemployment - and, on
the other hand, the huge increase in long-term unemployment is predominantly dis-
cussed in more empirical related approaches² explaining the reasons and implications
of reduced outflow rates on long-term unemployment.³

The more theoretical discussion on technical progress and unemployment does not
determine any clear-cut relationship. Pissarides (1990) shows that an increase
in the growth rate of technical progress results in higher revenues accruing from
the successful filling of vacancies and firms offer additional vacancies in the fol-
lowing periods. Therefore, a positive link between employment and productivity
²ExccptioiisarcCoLES, Masters (2000), Ljuxgvist, Sargext (1998, 1995), Acemoglu
(1995), Blaxciiard, Diamoxd (1994), Pissarides (1992) and Lockwood (1991).

³Soo for example Gora, SCHMIDT (1998), BθERl, W0rg0tter (1998), ROSEX (1997),
Burgess (1994), Layard, Nickell, Jackmax (1991) and Joxes, Maxxixg (1992).

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