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_beneathsurface
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I think they are important question. Let's imagine a Solow-like model with a neutral technology, I mean a tech that doesn't change the shape of isoquant, namely y=A(t)f(K,N). A(t) is a moltiplicative factor that, for sake of simplicity, let's assume increase at a exogenous and costant rate equal to "g". Solow showed in his 1956 paper, both capital and real wage per worker increase indefenetly. If we assume another type of technology, namely a labor augmenting tech, production function is y=f(K, A*N) where A is supposed to grow at exogenous costant rate "g". Here we have real wages increasing at the "g"rate and Y and K at "n+g" rate where n is labor force growth rate. Even if we assume a very basic Solow model without technology of any sort (i.e. A=1), in a perfect competition market we have that the distributive quote of labor (and capitalist's profit) equals the labor (capital) elasticity of product. Ex post their sum equals one, anyway. If we are ongoing to the steady state, and production function shifts upward, whatsoever reason, labor elasticity increases and so do both real wages and labor distributive quote. Anyway I find it difficult to make the question up in a "pure" classic macro model with perfect competition, too. With a vertical AS and a loglinear cobb douglas-like aggregate function (y=(1-a)k+an) where k=log Capital and n=log Labor and a is the parameter), an upward shift in the aggregate function (namely a increase in marginal productivity of capital, as technology improves) has a deflationary effect, given the level of AD components, but the parameter which define the labor demand are influenced by those of the aggregate production and labor demand shift upward and its slope increases. This results in a higher real wage, again. The only case I can imagine for your question to be realistic is the classical ricardian case of labor applied to a scarse input as land is. But in our post-Ricardo world I think aggregate production function implies less and less use of land than before. I think that the problem in every case of these is that nominal wage are flexible and models imply full employment of factor. If we want something to happen we should introduce some rigidity like nominal wage and labor supply rigidities. But in that case we are leaving General Equilibrium models and enter disequilibrium world. But that puzzles me because your question is addressed to general equilibrium theorist.
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Sorry...is it labour-augmenting technology? Will it change the shape of capital/labor isoquant of production? Do you assume imperfect comperition and a elastic demand function and what about eventually for the markups? And what about excess capacity? Do i have to considerazioni some slack? Thnx
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Nov 9, 2015