| OCR Text |
Show conditions are implicit in the nature of the function. It is assumed that the nature of ( 1) is such that either constant or increasing marginal welfare exists with respect to each argument or determinant. In ( 1), the concept " welfare" cannot be measured directly, and for that reason we need a surrogated welfare function* The latter can be obtained from ( i) by taking household income, Y, as the ranking criterion for the other arguments. We, therefore, make Y the value criterion for, and index of, welfare. Another value criterion used in the study is state- wide employment, N. This criterion, however, has some undesirable features as far as using it to predict changes in welfare. The two features we have in mind are, first, that the magnitude of the increase in welfare may be greatly underestimated if technology is growing at a very rapid rate, and, secondly, that as a result of a possible suboptimum occupational structure, the magnitude of the increase in welfare may be overestimated. For a relatively short forecasting period, these features can very likely be ignored. The income criterion can also overestimate the welfare effect, if the distribution of income is suboptimum. We will assume, however, that & in ( 1) is an optimum, and that it is also independent of the level of income. Therefore, two criteria-- income and employment-- are used as indexes of welfare. The preferred one, however, 1$ income. The transformed welfare function takes the form; ( 2) YCDj. ( Xi, . . ,, Xn), D2 < Xlf . . ., Xn), . . ., ^ n v^ l* • * •> Xn)| ot ,.• » ]# ? It is very unlikely that the growth of technology ( and also of capital, for that matter) would result in a decrease in state- wide employment. 9 |
