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Factor substitution and convergence speed in the neoclassical model with elastic labor supply

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  • Gómez, Manuel A.

Abstract

We study the link between factor substitutability and the speed of convergence in the Ramsey–Cass–Koopmans model with elastic labor supply and normalized CES production. If the baseline value of capital per unit of effective labor is below its steady-state value, an increase in the elasticity of substitution reduces the convergence speed.

Suggested Citation

  • Gómez, Manuel A., 2018. "Factor substitution and convergence speed in the neoclassical model with elastic labor supply," Economics Letters, Elsevier, vol. 172(C), pages 89-92.
  • Handle: RePEc:eee:ecolet:v:172:y:2018:i:c:p:89-92
    DOI: 10.1016/j.econlet.2018.08.040
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    References listed on IDEAS

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    More about this item

    Keywords

    Elasticity of substitution; Elastic labor supply; Convergence speed;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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