Abstract
The main objective of the present paper is to work out, by means of a stochastic maximum principle due to A. Bensoussan, development paths along which surplus-labour can be absorbed into production, and to establish patterns of social valuation and an institutional framework which enable the economy to attain and maintain full employment.
In the first two Sections we present the problem and introduce, relying on stochastic differential equations, economic concepts and ideas needed in Section 3 to make an intuitive and precise formulation of the stochastic control problem.
In Section 4 we give a fairly complete derivation of the maximum principle and make detailed economic interpretation of it, in order to keep the links with our original problem alive.
In the last Section, we deal with questions related to the attainability and reversibility of the optimal labour allocation policy obtained.
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Gómez, G.L. (1988). Attainability and Reversibility of a Golden Age for the Labour-Surplus Economy: A Stochastic Variational Approach. In: Albeverio, S., Blanchard, P., Hazewinkel, M., Streit, L. (eds) Stochastic Processes in Physics and Engineering. Mathematics and Its Applications, vol 42. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-2893-0_6
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DOI: https://doi.org/10.1007/978-94-009-2893-0_6
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