Journal of Applied Mathematics and Decision Sciences
Volume 2005 (2005), Issue 4, Pages 201-211
doi:10.1155/JAMDS.2005.201
Abstract
We examine a model that blends the neoclassical theory of investment with an intertemporal efficiency wage model with turnover costs. Investment decisions in capital are associated with the allocation of labor and the determination of efficiency
wages. The model relates Tobin's q to efficiency wages and, in particular, to the Solow condition. It provides a general
framework to analyze firm's intertemporal choices of capital, labor and efficiency wages.