Open AccessChoice Of Technique And The Volume Of Saving (A Re-Examination Of The Cobb-Douglas Model)
Author(s) -
Mohammad Anisur Rahman
Publication year - 1968
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v8i4pp.606-617
Subject(s) - economics , compromise , equity (law) , production (economics) , distributive property , labour economics , microeconomics , mathematics , social science , sociology , political science , pure mathematics , law
The purpose of this paper is to re-examine the relationshipbetween the degree of aggregate labour-intensity and the aggregatevolume of saving in an economy where a Cobb-6ouglas production functionin its traditional form can be assumed to give a good approximation toreality. The relationship in ques¬tion has an obviously importantbearing on economic development policy in the area of choice of labourintensity. To the extent that and in the range where an increase inlabour intensity would adversely affect the volume of savings, acon¬flict arises between two important social objectives, i.e., higherrate of capital formation on the one hand and greater employment anddistributive equity on the other. If relative resource endowments in theeconomy are such that such a "competitive" range of labour-intensityfalls within the nation's attainable range of choice, developmentplanners will have to arrive at a compromise between these two socialgoals.