CHAPTER 6

Labor, Production, and Economic Growth

Let’s take stock of what we have accomplished so far. We have worked out the equilibrium condition in which workers adjust their work time to the real wage they get for their efforts. And we have worked out the equilibrium condition under which income earners adjust their saving to the return on saving. We have also worked out the equilibrium condition for matching the saving choices of income earners with the investment choices of firms.

Now it remains to do two further things: First, we have to work out the equilibrium condition for matching the work choices of individuals with the hiring choices of firms. Second, we have to move beyond the static analyses of previous chapters to take up the ...

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