Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5103090 | Physica A: Statistical Mechanics and its Applications | 2017 | 9 Pages |
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
Authors
Ali Hosseiny, Mauro Gallegati,