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WAGES, EMPLOYMENT AND GROWTH *
Author(s) -
Louis Lefeber and,
Sukhamoy Chakravarty
Publication year - 1966
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1966.tb00843.x
Subject(s) - economics , wage rate , capital (architecture) , wage , returns to scale , capital accumulation , path (computing) , production (economics) , stock (firearms) , growth rate , computable general equilibrium , labour economics , microeconomics , econometrics , mathematical economics , mathematics , computer science , profit (economics) , mechanical engineering , geometry , archaeology , programming language , history , engineering
SUMMARY The paper presents a multisectoral growth model which is readily computable with non‐linear production functions and is descriptive of economic conditions prevailing in over‐populated countries. The purpose is to show the optimal allocation of resources over time in a labor surplus economy if the dominant social consideration is to increase the rate of employment as fast as possible. Given an institutionally stipulated minimum wage rate and certain other assumptions, the path that maximizes the rate of economic growth also approximates the path that minimizes the time needed to attein full employment as long as the rate of increase of the capital stock exceeds the rate of growth of the potential labor force. A rigorous proof of the proposition is presented with the help of the calculus of variations and the numerically computable solution of the growth model is derived from the conditions underlying the optimum at any moment of time. The model is an analogue of competitive markets under appropriate demand conditions. In addition, since it is computable, the model can be used by economic planners in countries where large scale unemploffment or under‐employ‐ment exists.