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3

I am not sure why you expect method two to work, as generally $$ \frac{\partial F(K,N)}{\partial N} \neq \frac{\partial F(K,N)}{\partial K}\frac{\partial K}{\partial N}. $$ These are partial derivatives. Unless information to the contrary exists $$\frac{\partial K}{\partial N} = 0.$$ You can easily see that these formulas are not connected by calculating the ...


2

I think I get the answer but I am not 100% sure. Any comment would be welcome. I realized that this is related to the search-matching nature of the model (comparing to competitive labor market), so that if capital is not perfectly reversible the worker can bargain with the firm. Note that even with perfect reversibility, given the match-specific surplus, the ...


2

Wage/labor share of income/output is total compensation of employees divided by total output (See Schneider 2011). This share is typically calculated using nominal wages and nominal GDP. If you want to calculate wage/labor share of income/output then you should use total wages divided by nominal output: $$ s_L = \frac{WL}{PY}$$ Where $s_L$ is the share, $WL$ ...


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