determine wages and, therefore, the amount of labor in research/manufacturing.

Both the intermediate good sector and the R&D sector use skilled labor. Saying that the value of an hour in manufacturing equals the expected value of an hour in research seems intuitive.

In my presenatation and in the AH book we have φ(n) = n (i.e. φ'(n) = 1) and the arrival rate is λφ(n). In the Econometrica-article they use φ(n,s), where s is the amount of specialised labor. A firm maximizes expected profits from research by choosing n and s.

λφ(n,s)V_t+1 - w_tn - w^s_ts, . . . s.t. labor inequality constraints

So go and call Kuhn or Tucker for help ;-D. 

Kuhn from the Kuhn Rikon Grill Chef skewer set?