EC250 Chapter Notes - Chapter 8: Yle, Real Wages, Marginal Product
Document Summary
Technological progress in the solow model: e = labor efficiency, technological progress is labor-augmenting: it increases labor efficiency at the exogenous. G = e/e: y = f (k, l x e, where l x e = the number of effective workers increases in labor efficiency have the same effect on output as increases in the labor force, notation. Y = y/le = output per effective worker. N k to provide capital for new workers. G k to provide capital for the new effective workers created by technological progress. The growth rate of y equals the growth rate of (ye) plus that of l. we just saw that, in the steady state, the growth rate of (ye) equals g. and we assume that l grows at rate n. In the golden rule steady state, the marginal product of capital net of depreciation equals the pop. growth rate plus the rate of tech progress.