ECON 4130 Lecture Notes - Lecture 10: Human Capital

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L deaths cause land labor ratio to rise. Ed 1 marginalproductof landfalls so does revenue aggregatefans percapita income rises. Y alaxb the lawofdiminishing retury implies: l d al, s b s i d t p i. Zy f lz l zx if you double allfactorinputs output doubles. I ny in l ald xb l ny ina t inld t inxb. Iny ina t al n l t b in x. In x told l n l ilityoflanel. si ontputelom. Yr n ufor small 0 iog o appx o a e: y, l. Assume competitive markets constant returns to scale normalize p i a mp y wut wage. B mpx priceofland crentals example let thestandardassumptionsapply suppose y 4l bx4_ I f land supply were toincreaseby 1 aggregaterent output oy t o 4. If laborsupply were to increaseby 2 aggregate real output oy t l 2. A is a measurement of how well theeconomycombines factorinputstogetherto produce outputs it is totalfactor productivityctfp.

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