Question: Using a Cobb-Douglas production function with capital's share at 1/3, calculate the effect of the following shocks to the labour market. (a) An intensive training
Using a Cobb-Douglas production function with capital's share at 1/3, calculate the effect of the following shocks to the labour market.
(a) An intensive training programme makes workers 5%more efficient (so it is as if we had 5% more workers). How will this affect aggregate GDP in the short and the long run? What about output per capita?
(b) Sudden immigration increases the labour force by 5%. How will this affect the aggregate capital stock and aggregate production in the short and the long run? What about output per capita?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
