ABSTRACT
Multiple equilibria are a feature of both the fixed coefficient with wage differentials and variable coefficient with wage differentials version of the two sector growth model. Unemployment equilibria and unemployment growth paths occur only in the fixed coefficient case. The relationship between equilibrium prices and the wage-rentals ratio depends on the factor value intensity rankings. A related area to that of wage differentials that has received some attention is minimum wages legislation. The discussion has mainly concentrated on the impact of unionization and minimum wage laws on the distribution of income. The consequences and implications of such minimum wage laws for economic growth have not been explored in any rigorous manner. In general the effect of wage differentials results in multiple equilibrium and hence indeterminate growth. The role played by factor value intensity rankings is crucial to the multiple equilibria problem.
