The economics of `new blood'. (Q1411035)

The paper offers a widely formulated model of general equilibrium states in a labour market with search and matching. The assumed environment with growing stock of productive public knowledge, continuum of workers, continuum of firms and risc neutral agents is considered. The mathematical model reflects the heuristic idea that newly educated employees (``new blood'') have better ability to be efficent in some professions meanwhile in other professions their lack of experience and skill plays more significant role. The main sections of the paper deal with the basic model including the endogenous increase in the public knowledge and no loss of skill, with the properties of the equilibrium wage statement, and with the properties of the general equilibrium in the model. Further sections offer several extensions of the basic model.