The Reachability of Techno-Labor Homeostasis via Regulation of Investments in Labor and R&D: a Model-based Analysis

This paper addressing, generally, the issue of optimizing the structure of investments in an economy sector focuses on the analysis of the distribution of investments between labor (education and wages) and technologies (production and R&D). The analysis is based on a model of techno-economic development involving production, technologies and welfare. The model design employs a modified Cobb-Douglas-type production function depending, in particular, on the "quality of labor". A model's trajectory is viewed as optimal if it exhibits techno-labor homeostasis, i.e., stable growth in technologies and welfare. A desirable regime is pre-homeostasis, a (relatively short) transition period followed by homeostasis. Non-desirable behaviors are qualified as collapse and pre-collapse. We describe the domains of model's parameters and initial states which correspond to different behaviors of the model and use this description to carry out a qualitative analysis of selected industry sectors in Japan in 1982-1998.