Question: According to the Solow model, Potential output growth rate = Long-run labor growth rate + Long-run labor productivity growth rate So what changes in potential

According to the Solow model,

Potential output growth rate = Long-run labor growth rate + Long-run labor productivity growth rate

So what changes in potential out really boils down to labor growth and productivity. From the formula above, if worker productivity is growing at 3% per year and the total workforce is growing at 0.5% per year, then potential real GDP is expected to grow at 3.5% per year.

Now, from the equation what do you think are some critical factors that will affect the calculation estimates of the potential labour force (or human capital)?

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