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Other ªgures for unemployment inºows and outºows are remarkably stable. The United States clearly stands by itself: although the percentage of workers losing jobs is very high (2 percent per month), the percentage of jobless individuals ªnding jobs is also very high, and as a result the percentage of long-term unemployment is very low. It is also interesting to note that non-EU countries are not characterized by an inactive labor market, despite having only one-third the European Union’s rate of unemployment.

Here is where the problem would lie if such a theory of “endogenous” accumulation of technological progress were to Slowdown in Growth 21 be appended to Solow’s theory. In Solow’s theory, technological progress is a public good which does not ªgure in the distribution of value added between wages and proªts. If instead we were to assume that technological progress should be paid, we would soon be faced again with the contradictions that appeared in Marx’s or Marshall’s analyses: the “rent” earned by inventors would soon hamper the remuneration of other factors of production (given the fact that technological progress is, in the long run, the only engine of growth).

In addition to this quantitative obstacle, there is an educational one. In the early nineteenth century an illiterate ironsmith or coppersmith in a Western city did not face serious adaptation problems when shifting from his traditional workshop to one in which a few workers were involved in building relatively simple weaving machines or elementary steam machines. Today, a coppersmith in the Third World is overwhelmed by an electric locomotive or perhaps even by a diesel truck. The Third World is thus confronted with an inversion of the sequence that led to industrialization in European countries.

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An Introduction To Model Theory by Zarko Mijajlovic


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