The name is absent

(A.19)

+й)

[γσc (α + δ) — δ] ,

(A.20)

∆ = —_£k (1 — α)∫2 — α + f^α+^ ) ∣-^α- + γσc + ɪ]!

∖ α у 1 — α         1 + δ j

— α [α + γσ_c (α + δ)] < 0,

(A.21)

W               u⁰⁰

Y ≡-----=, σ_c ≡—C — ,

W + rk           u⁰

σg≡

g⁰

^—α—
g⁰

where σc is the coefficient of relative risk aversion in private consumption (which
is identical for private and public sector workers in the initial equilibrium) and σg
is the coefficient of relative risk aversion in public consumption. As mentioned,
these results hold provided W ≥ w. If this condition is satisfied initially, it will
continue to be met if dW ≥ dw. Noting from (2.11) that dw∕dτ = —k (1 + ddT)
and using (A.19) and (A.20), we find

—k

∆ J {δ + α [1 + α + γσc (α + δ)]}

dW dw
dτ dτ

—     /)     ^ + γσc (α + δ) + (^α+δ W_τ¾ — 1)1 .   (A.22)

α∆     1 — α                α 1+ δ

The proof of Proposition 6 given in Appendix 3 utilises (A.21) and (A.22).

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