Article ID Journal Published Year Pages File Type
5103090 Physica A: Statistical Mechanics and its Applications 2017 9 Pages PDF
Abstract
We review the production function and the hypothesis of equilibrium in the neoclassical framework. We notify that in a soup of sectors in economy, while capital and labor resemble extensive variables, wage and rate of return on capital act as intensive variables. As a result, Baumol and Bowen's statement of equal wages is inevitable from the thermodynamics point of view. We try to see how aggregation can be performed concerning the extensive variables in a soup of firms. We provide a toy model to perform aggregation for production and the labor income as extensive quantities in a neoclassical framework.
Related Topics
Physical Sciences and Engineering Mathematics Mathematical Physics
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