Labour externalities lead to economic instability and under-accumulation of capital.
The article explores how certain factors can lead to multiple possible outcomes in economic models. By analyzing a model with various parameters, the researchers found that when there are small labor-related effects, the equilibrium can be uncertain. Specifically, a balance between capital and labor, along with the elasticity of labor supply, plays a crucial role. Additionally, in a specific type of economy, having stronger labor effects can lead to instability. Overall, the study shows that certain conditions can result in a lack of capital accumulation in the long run, even in models with a finite time frame.