Describe how the system converges to its new equilibrium

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Fogel described the process where mortality has been declining for the last 300 years or so. Suppose that now, in this new world, that the death rate at every wage is lower than it had been previously. Also, however, technology has been changing rapidly in the last 300 years, and we can think of this as one big shift out in the technological frontier—the marginal productivity of labor. Using a new Lee-Malthus diagram, show how the change in the mortality schedule and the simultaneous change in technology would work. Be sure to label all curves and the axis of your diagram. Label the old (pre-change) equilibrium wage and population w and p, and the new equilibrium wage and population w* and p*. Describe how the system converges to its new equilibrium. What happens to the equilibrium wage in the long run? What happens to the equilibrium population size in the long run?

Reference no: EM13147878

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