Use the Cobb-Douglas production function to explain why even massive movements of labor and capital across national borders may have little impact on differences in per capita income
What will be an ideal response?
Relatively low per capita income may be due to low total factor productivity or to low capital per worker. In the latter case, migration of capital or of labor could reduce inequality. In the former case, however, rising levels of capital in a low-income economy will do little to raise output per person. Declines in the labor input due to out-migration from a low-income economy might mean more capital for each of the remaining workers but, again, the increase in output per worker will be small if total factor productivity is low.
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Which of the following would decrease the price of packaged hot dogs?
a. An increase in the price of hot dog buns, a complement to packaged hot dogs. b. A decrease in the price of hamburger meat, a substitute for packaged hot dogs. c. A technological advance that lowers the cost of producing packaged hot dogs. d. All of these.
Unions contribute to
a. frictional unemployment but not the natural rate of unemployment. b. the natural rate of unemployment but not frictional unemployment. c. both frictional unemployment and the natural rate of unemployment. d. neither frictional unemployment nor the natural rate of unemployment.