The interest rate r depends negatively on the discount factor (β), and the same factor
(that represents also the degree of impatience) has a negative impact on the time
spent working T and a positive impact on human capital h. A higher productivity
of human capital (through the elasticity parameter δ) has a positive influence on the
time spent working T and (either through the efficiency parameter E or through the
elasticity parameter δ - in this latter case if E is high enough -) on human capital h.
In other words, when households are less impatient or when human capital is more
productive, the level of human capital improves.
The fraction of the workforce in the human resources service ρ depends positively on
the weight (elasticity) of tasks in horizontal coordination costs (ξ) and on the weight
of human resources in vertical coordination costs (η) and it depends negatively on
the weight of production workers in horizontal coordination costs (θ) and on the
weight of tasks in total output (α). In other words, more workers are allocated to
human resources management when coordination costs are more resources intensive
or consuming, or when the production failure risk (due to switch costs between tasks)
is higher. On the contrary, more workers are allocated to production activities when
task specialization is more productive or when bureaucratic coordination is more
costly.
The intensity of multi-tasking n (the number of tasks per individual) as well as the
level of consumption c increase with the efficiency of human capital E , the size of the
workforce L and the technological efficiency of production A; and they decrease with
the extent of coordination costs (recall that a higher d means a lower importance of
coordination costs).
The wage rate w decreases with the efficiency of human capital E , the size of the
workforce L and the extent of coordination costs, and increases with the technolog-
ical efficiency of production A.
The level of assets a decreases with the size of the workforce L and the extent of
coordination costs and increases with the efficiency of human capital E and the
technological efficiency of production A.
5 Short-term dynamics of the model
The model considered can then be simulated in order to study the effects of different
types of technological shocks that can hit the economy. Hereafter we present some
representative simulation experiments on a calibrated model. Since the model is in
many aspects highly stylized (no physical capital for example), calibrating it on a
real economy is a daunting task. Below we consider a benchmark calibration and
the corresponding short-term dynamics. The equilibrium paths generated by this
calibration have been checked to be qualitatively robust to numerous parameters’
changes. While the quantitative results displayed below are only indicative and
should not be taken too seriously, the qualitative dynamics are found to be strongly
robust.
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