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SSO Problem 2. Labour market models with efficiency wages [15 points] Let us study the labour market model with the efficiency wages. The only factor

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SSO Problem 2. Labour market models with efficiency wages [15 points] Let us study the labour market model with the efficiency wages. The only factor of production in the model is labour. a) According to the Solow condition, the company's optimal profit maximising wage level is given by the -=1 (Romer book 4th ed. equation 10.8). Let us assume that the efficiency we'(w) de w equation dw e function is given as e(w)-(w-v)", 0<>

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