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6 Cards in this Set
- Front
- Back
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Figure 7.2 Convergence in Income per Worker Across Countries in the Solow Growth Model
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The technology for accumulating human capital is (formula)
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Hs’ = b(1 – u)Hs
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No capital used in production, firms only use efficiency units of labor. The production function is given by
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Y = zuHd
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The growth rate of human capital is
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H’/H – 1 = b(1 – u) – 1
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Competitive Equilibrium
Market clearing gives uHs = |
uHs = uHd
supply equal to demand (Hs=Hd=H), C = duH H’ = b(1 - u)H |
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The Endogenous Growth: The Firm
real wage per hour of work is |
wHd = dHd
The real wage will change in proportion to the quantity of human capital of the representative consumer |
