Low capital-labor substitution makes economic stability harder to achieve
The article explores how the relationship between capital and labor affects the stability of economic equilibrium. It finds that when capital and labor can easily be swapped, the minimum level of returns needed for stability is not greatly affected. However, if capital and labor cannot be easily substituted, the minimum level of returns needed for stability increases significantly. This means that small changes in how capital and labor are used in production can make it harder to predict economic outcomes.