Capital and the provision of work places

Abstract

This study has the aim to work out the determinants of organized employment in a macroeconomic equilibrium framework. Starting point of this project was the view that modern economic production requires internal organization of the interaction of individual workers. To analyze this idea and its macroeconomic implications in a rigorous and systematic way, a model was developed whose central innovative feature is that firms have to employ non-production resources for organizing work according to an organization technology. So far the analysis has been concentrated on labor as the only input in both the organization and the production technology. The purpose of this chapter is to work out the role of capital in an economy with internal organization of work. In particular, the equilibrium allocation of capital and its effect on the aggregate level of organized employment are determined.