Monday, July 23, 2018

An Opportunity For The Working Class With Increased Markups

A Switch-Point Perturbation Diagram

I have a new working paper at SSRN.

Abstract: This article presents an analysis based on a comparison of stationary states. With technology and relative markups among industries taken as exogenous, the long-period trade-off between wages and rates of profits is determined. A long-period change in relative markups among industries can create a switch point exhibiting capital-reversing. Around such a switch point, a higher wage is associated with firms wanting to employ more labor for a given net output – a favorable occurrence for organized labor.

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