Round-about production, co-ordination failure, technological change, and the wage-employment dilemma

The contrasting experiences of European and the US labour markets suggest t o most analysts the conclusion that technological shocks would be the cause of the appearance of unemployment, and institutional settings, that genera te real wage rigidity, would be the cause of its persistence. In this paper we intend to invalidate this conjecture. In order to do so we shall turn t o an analytical framework which differs from the standard neo-classical one in that it allows to enlighten what happens step by step along a way that begins with the breaking of the existing steady state due to an attempt to bring about a change in technology. (C) 2001 Elsevier Science B.V. All righ ts reserved.