Figure 1: The Capacity Curve

1
Work Capacity
v3
v1
v
Income
Figure 1 The Capacity Curve The Piece Rate
2
Piece Rate
Aggregate Labor Supply
Figure 2 Labor Supply
3
Figure 3 Possible Equilibria
4
Employment Income
Figure 4 Effect of Non-Labor Income on the
Capacity Curve
5
Land Owned
Individuals Ranked By Land Owned
Figure 5 Distribution of Land
6
Piece Rate
Individuals Ranked By Land Owned
Figure 6 Effective Reservation Wage
7
Piece Rate
Piece Rate
Individuals Ranked By Land Owned
Aggregate Labor Supply/ Labor Demand
Figure 7 Type of Equilibria
8
Income from Work
y0
y1
y2
y3
Inherited Income
Figure 1
9
Income from Work
y0
y1
y2
Inherited Income
y4 y5 y3
Figure 2
10
Income from Work
Inherited Income
Figure 3