8. Reinterpret the endogenous growth model inthis chapter as follows. Suppose that there aretwo groups of people in a country, the low-skilled workers and the high-skilled workers.The low-skilled workers have less human cap-ital per person initially than do the high-skilledworkers. In the economy as a whole, output isproduced using efficiency units of labor, andtotal factor productivity is z, just as in theendogenous growth model in this chapter. Eachindividual in this economy accumulates humancapital on their own, and each has one unitof time to split between human capital accu-mulation and work. However, now b = bn forthe high-skilled, bun for the high-skilled, and uthe low-skilled. In the United States, there hasbeen an increase in the gap between the wagesof high-skilled workers and low-skilled work-ers, that has occurred over the last 30 years orbị for the low-skilled,forso. Determine how this model can explain thisobservation, and discuss.

According to the endogenous growth concept, economic growth is predominantly driven by internal…

Reinterpret the endogenous growth model in this chapter as follows. Suppose that there are two groups of people in a country, the low- skilled workers and the high-skilled workers. The low-skilled workers have less human cap- ital per person initially than do the high-skilled workers. In the economy as a whole, output is

Reinterpret the endogenous growth model in this chapter as follows. Suppose that there are two groups of people in a country, the low- skilled workers and the high-skilled workers. The low-skilled workers have less human cap- ital per person initially than do the high-skilled workers. In the economy as a whole, output is

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter19: Economic Development

Section: Chapter Questions

Problem 1.1P

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