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##### This assignment is due in class, before lecture starts,

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Assignment 3;Instruction;This assignment is due in class, before lecture starts, on Tuesday, Feb 15.;Every 5 minutes delay in submitting the homework (once lecture starts) will cost;you 5 points (out of 100);If you are unable to attend lecture on Feb 15, it is your responsibility to make;sure that I have the homework (hardcopy) by 1:45pm that day. Email;submissions will not be accepted.;Econ 491 students answer the first four questions. Econ 591 students answer all.;Question 1 (20 points);In Figure 6.12 from the text (reproduced above), predicted GDP per capita relative to;the US is, where is based on average years of schooling in country i.;(a) Compare Brazils actual and predicted incomes relative to the US. Which one;is larger?;(b) Explain why;is an imperfect measure of human capital. How can this;explain the imperfect fit between actual and predicted income per capita;relative to the US in the figure above?;Question 2 (30 points);Consider the following data on the fictional countries of Sylvania and Freedonia. The;production function is y = Ak h1, where = 0.5.;Output per worker, y;Physical capital per worker, k;Human capital per worker, h;1;Sylvania;100;100;25;Freedonia;200;100;64;Econ 491/591, Winter 2011;Shankha Chakraborty;(a) Calculate the level of productivity in each country.;(b) Calculate the two countries relative levels of output if all differences in;output were due to productivity.;(c) Calculate the countries relative levels of output if all differences in;output were due to factor accumulation.;Question 3 (20 points);The table below provides data on the annual growth rates of output, physical capital;and human capital per worker for three countries. For each country, calculate the;growth rates of productivity and factor accumulation assuming = 1 / 3. In which;country does factor accumulation contribute the most to growth? In which country;does productivity contribute the most to growth?;Country;Growth rate of;output per worker;y (%);Growth rate of;physical capital per;worker;Growth rate of;human capital per;worker;-0.02;1.90;1.54;0.46;2.82;0.85;0.37;0.26;0.63;Argentina;Austria;Chile;k (%);h (%);Question 4 (30 points);Consider the following two production functions;Y = AK L1 and Y = AK;Denote the growth rate of a variable X by X = X / X.;(a) Calculate productivity growth (A) for each production function.;(b) Assuming 0 < < 1, compare the Total Factor Productivity (or TFP, another;name for A) growth rates predicted by the two functions. Which one is;higher?;Question 5: Human Capital in Sweden (Ec 591 students only);This question is based on the article by Lars Sandberg, The Case of the;Impoverished Sophisticate, available on Blackboard.;Why, according to Sandberg, was Swedens stock of human capital;disproportionately large compared to its income level in 1850? How did that help;Sweden catch up with Western Europe in the years leading up to WWI?;Type your answer in 12pt Times New Roman font, not exceeding two pages.;2

Paper#31556 | Written in 18-Jul-2015

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