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Alwyn Young has a recent paper




The question is part C;Alwyn Young has a recent paper in which he studies the macroeconomic consequences of the horrible tragedy of AIDS in sub-Saharan Africa. Answer the following questions, motivated by his research.;(a) In the production function approach we studied in class, we noted that the wage rate is equal to the marginal product of labor. Write the mathematical expression of this statement. That is, write the wage as a function of capital labor, and the TFP parameter. Assume that the production function is CRS and labor share of output is 1/3.;(c) Discuss your result. Why does the wage rate change? Why is the effect larger or smaller in magnitude than 25%? What would happen to the size of the effect if labor plays less role in the production of output i.e. if labor share of output is lower?


Paper#31550 | Written in 18-Jul-2015

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