goods each worker produces remains and output remains constant through time. Since the labor productivity of sector two increases at a constant compounded rate , the output of sector two at time (denoted ) is: where is the quantity of labor employed in sector two and is a constant that can be thought of as the amount of output each worker can produce at time . Since productivity grows at a constant compounded rate , the number of goods each worker produces at time equals , and the output of sector two grows at a rate proportional to productivity growth. To more clearly demonstrate how wages and costs change through time, wages in both sectors are originally set at the same value . It is then assumed that wages rise in direct proportion to productivity (i.e., a doubling of productivity results in a doubling of wages, a tripling of productivity results in a tripling of wages, and so on). This means that the wages of the two sectors at time determined solely by productivity are: (since productivity remains unchanged), and (since productivity increases at a rate ) These values, however, assume that workers do not move between the two sectors. If workers are equally capable of working in either sector, and they choose which sector to work in based upon which offers a higher wage, then they will always choose to work in the sector that offers the higher wage. This means that if sector one were to keep wages fixed at , then as wages in sector two grow with productivity workers in sector one would quit and seek jobs in sector two. Firms in sector one are thus forced to raise wages to attract workers. More precisely, in this model the only way firms in either sector can attract workers is to offer the same wage as firms in the other sector—if one sector were to offer lower wages, then all workers would work in the other sector. So to maintain their workforces, wages in the two sectors must equal each other: . And since it is sector two that sees its wage naturally rise with productivity, while sector one's does not naturally rise, it must be the case that: . This typifies the labor aspect of the Baumol effect: as productivity growth in one sector of the economy drives up that sector's wages, firms in sectors without