Stability of equilibria in the overlapping generations model with endogenous labor supply
This paper looks at the issue of existence and stability of steady state equilibria in an overlapping generations model with productive capital (a-la Diamond) augmented to include endogenous labour supply. The paper derives necessary and sufficient conditions under which a steady state equilbrium is stable. Furthermore, a key result of this paper appears to be this: if labor supply is increasing in the capital-labor ratio at some steady state equilibrium, then, the usual conditions required for stability of the nontrivial steady state in the standard Diamond model are enough to guarantee stability of that steady state in the Diamond model augmented by endogenous labour supply.
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