The name is absent

(4)

where proposition 1 implies that I^a — 1, I^a — v, and I^a — p^AV. Equilib-
rium under autarky requires that the following market clearing conditions
for sectors X and Y respectively, are satisfied:

θι + vθ_m — 1 ∖θ_l + vθ_m + p^AV0_h\

where in both conditions the left-hand side equals the supply of that good
and the right-hand side equals the corresponding demand. Solving either of
the above market clearing conditions for the equilibrium autarky price we

A   θι + vθ_m

^p Vθh

It also follows from proposition 1 that 1 > p^A > υ∣V.

4.1 Optimal education policy

The optimal education policy corresponds to the solution of the following
program:

1

max|{(θι + vθ_m) ( ɪɔ + Vθh (p^A) ² }

Oi 2              pA J

— ∖(p'''' ² ∖^θl + ^υθm + V⁰hp^A\                         (6)

subject to (5),

θh — 1 - θι - θ_m                          (7)

and

β_m — ^{C(1 - ,,} >^{- b}                         (S)

c — 1

where the last two constraints follow from (1) and (2).

The optimal proportion of type I workers under autarky is:

<<   <   10   11   12   13   14   15   16   >   >>