Optimal growth with investment enhancing labor

Bertrand Crettez, Naila Hayek and Lisa Morhaim

Mathematical Social Sciences, 2017, vol. 86, issue C, 23-36

Abstract: We study a non-convex optimal growth problem with investment enhancing labor. We prove that there exists an optimal growth path, that all optimal paths are interior and we provide a condition under which at least one of them is monotonic. We also study the existence and uniqueness of the steady state. We show in particular that a rise in the efficiency of the investment enhancing labor does not necessarily lead to an increase in the steady state value of this labor. Furthermore we provide a complete study of the dynamics of the optimal solution in the special case of a logarithmic utility function and a Cobb–Douglas production function.

Date: 2017
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:86:y:2017:i:c:p:23-36

DOI: 10.1016/j.mathsocsci.2016.12.002

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