Occupational Choice and Dynamic Indeterminacy
This paper construct a two-sector model of two-period lived overlapping generations with endogenous occupational choice where ability-heterogeneous agents choose whether to become educated when young. We show that the steady-state equilibrium can be locally indeterminate even under linear preferences and constant-returns Cobb-Douglas production technologies, regardless of the factor-intensity rankings. Thus, endogenous occupational choice can result in dynamic indeterminacy without complicate preferences/technologies and without requiring the consumption-good production $more capital-intensive. (Copyright: Elsevier)
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Volume (Year): 8 (2005)
Issue (Month): 1 (January)
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