Unemployment and Innovation

摘要: This paper analyzes equilibrium, dynamics, and optimal decisions on the factor bias of innovation in a model induced innovation. In with full employment, we show that (a) if elasticity substitution is always less than or greater unity, there unique steady state equilibrium; (b) stable, but convergence oscillatory; (c) saddle point; (d) unity for both high low effective capital labor ratios intermediate values, then can be multiple states. where efficiency wages lead to equilibrium unemployment, will towards excessive augmenting innovation, resulting too being oscillatory, rather monotonic.Similarly, between skilled unskilled wage unemployment only, excessively skill-biased innovation.This provides an alternative resolution Harrod-Domar conundrum disparity natural warranted rate growth Solow, strong policy implications, instance, concerning effects income distribution monetary short run long.