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- September 13, 2020
- By menge

Consider an endogenous growth model where the quality of workers increases at a rate g(????)=????? where u is the share of the population working at research universities. Suppose that the total amount of workers (= to the population) is L=1. Suppose that the production function for manufactures is ????=????^(1/3)((1?????)????)^(2/3), where (1?????) is the number of workers employed in manufacturing.

4) [20 pt] Suppose that the share of workers in research is fixed at 2.5%. What is the growth rate of total output in this economy?

5) [10pt] Suppose that the share of workers in research is now 81%. What is the growth rate of total output in this economy?

6) [10pt] Explain your results in question 4 and 5.