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May 23, 2005
The Classical Model - I
The supply and demand for labor are the fundamental determinants of the amount of production.
Business cycles result from shocks to the production function.
We derived the labor supply curve and also considered the famous backward-bending labor supply curve.
The government could shift the labor supply curve by changing the tax rate for labor income (left). The classic welfare problem is on the right.
Posted by bparke at May 23, 2005 10:41 PM