&gt; What that suggests is that a large gap between compensation and productivity is unstable<p>The entire economy is unstable. Things are never in equilibrium.<p>The labor market in particular is extremely illiquid. Employees don&#x27;t change jobs twice a day, and employers don&#x27;t decide to start new companies just because they saw opportunity on some competent person unemployed.<p>Also, jobs mostly don&#x27;t appear by themselves. Enterprises need capital, risk taking, and several other factors that people don&#x27;t just throw around.<p>Your completely liquid model needs plenty of adjustment.