What is average labour income in period zero

Assignment Help Microeconomics

Reference no: EM131789425

Question: Consider an economy with total population of 200. Let these 200 workers be equally divided between two groups: the rich and the poor. The poor have less human capital per person than the rich do.

l. Within each group, individuals do not differ by their skill level. Each individual in this economy accumulates human capital.

ll. Each period, a person has one unit of time to split between work and human capital accumulation.

lll. Each person devotes 0.9 units of time to working in each period.

IV. Suppose that bis equal to 14 and 12 for the rich and poor respectively.

V. In the economy, output is produced using the efficiency units of labor. That is output in period tis given by Y zu(100R 100P), where Rt and Pt are the human capital of a rich and poor person, respectively, at the beginning of period t. Let z 1, Ro 10 and Po 5.

a) What is average labour income in period 0?

b) What is economy-wide human capital growth rate between periods 0 and 1?

c) What is economy-wide human capital growth rate between periods 1 and 2? Explain why in this economy the human capital growth rate could be different across time.

Reference no: EM131789425

Questions Cloud

What does least squares estimates mean : What does "least squares estimates" mean? What is being estimated? What is being squared? In what sense are the squares "least"?

What is the purpose of assembly line balancing : Why is it not effective to only implement pieces of the agile methodology? What is the purpose of Assembly Line Balancing?

What data might you collect about the online customers : What data might you collect about the online customers to improve Dollarx2's profitability? What data might you collect to improve customer satisfaction.

In what ways do our schemas guide our beliefs and worldviews : Give examples of how a person's schema could define or limit his/her view of events in the world (e.g., religion, politics). Just need 125 words

What is average labour income in period zero : Consider an economy with total population of 200. Let these 200 workers be equally divided between two groups: the rich and the poor.

Discuss the different areas of the brain : Discuss the different areas of the brain and how memory is affected by one area being damaged by an accident or disease. Just need 125 words.

Discuss the implications of the ggp bankruptcy : Many analysts expected GGP equity holders to lose most or all of their financial interests in GGP. Discuss the implications of the GGP bankruptcy

How important is the tone at the top : How important is the tone at the top? Do you think people weigh the potential costs of acting unethically with the potential benefits?

What ways may it be adaptive to forget : How can knowledge of the brain and memory systems be used to help individuals suffering from memory problems (e.g., poor memory, amnesia, PTSD)?

User Account

All Pages