Employment Policy for Balanced Growth under an Input Constraint

Daniel Weiserbs, A. Kervyn and Alan Ingham

Chapter 4 in The Employment Consequences of Technological Change, 1983, pp 66-81 from Palgrave Macmillan

Abstract: Abstract We consider a vintage model in which an economy combines labour, capital and an imported resource (raw material) to produce a single manufactured good. The purpose of this chapter is to study the behaviour of the system when it is shocked out of its ‘golden rule’ path by the sudden imposition of a constraint on the volume of imports of the resource, while the relative price of the resource grows at a rate determined exogenously. A ‘capitalist’ and a ‘socialist’ solution are presented. The capitalist solution retains the constraint that the wage rate is equal to labour productivity on the oldest vintage in use. The socialist solution chooses the path on which consumption per capita is maximised and then examines various policies such that all of the labour force is employed.

Keywords: Labour Productivity; Wage Rate; Profit Maximisation; Social Welfare Function; Full Employment (search for similar items in EconPapers)
Date: 1983
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-06089-4_5

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DOI: 10.1007/978-1-349-06089-4_5

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