Technological Innovation, Demand Saturation and the Labour Market Puzzle under the Continuous-time Markov Process

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In this study, we analyse the evolution of income distribution and employment by using the multisectoral model in which the emergence of new products follows the stochastic process termed the Yule process. Moreover, we assume that the speed of demand saturation becomes faster as the products emerge later. As a consequence, we show that the rapid demand saturation accelerates the growth of employment but decelerates that of real wage rate. And we show that the rapid demand saturation accelerates the growth of profit share at least at the early period. The theoretical subjects concerning the muilsectoral model that we use are also investigated.